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JSC “Latvia's State Forests” Annual Budget has been Approved

The Supervisory Board of JSC “Latvia's State Forests” (LVM) has approved the company's budget for 2024. Due to the decrease in the market prices of wood products, it is planned that the revenue of LVM in 2024 will be lower than the revenue of 2023 and will reach EUR 525.3 million, while the profit before corporate income tax will be EUR 105.1 million. 95 % or EUR 499.9 million of the company's revenue will come from the sale of wood: assorted round timber, growing trees and wood chips.

In 2024, it is planned to sell a total of 7.52 million cubic metres of wood, including providing a range of round timber to customers in the amount of 7.35 million cubic metres. The sale of wood chips is planned in the amount of 706 thousand MWh.​

“Despite the uncertainty in Latvia and the world – slowing down of economic activity, falling wood prices and high inflation – JSC “Latvia's State Forests” expects to achieve its economic, environmental, and social goals set in the medium-term operational strategy for 2024. Forecasts for wood supplies by private forest owners are uncertain, since after the record high activity in 2022, there was a significant decrease in activity in 2023. If the downward trends continue in 2024, there may be a supply deficit in the market and a shortage of round timber products for producers. To ensure stability in Latvia's wood industry sector, it is planned to increase the volume of deliveries of round timber assortments,” says Pēters Putniņš, Chairman of the Board of LVM.

More forests to be restored

Both forest restoration and forest maintenance works to be performed in 2024 have been identified according to the forest management plan and the results of the survey in nature. Taking into account the market situation and the State's goals for achieving climate neutrality, the 2024 budget provides for additional afforestation volumes – forest restoration and planting is planned for a total of 19.4 thousand hectares. In turn, tending of young stands is planned in 38.9 thousand hectares. To reduce the cost of services and solve the issue of labour shortage, as well as to maintain a high quality of work at the same time, mechanized solutions are increasingly used in forest restoration. The volume of mechanized planting this year is planned at the level of 2023 – 1.2 thousand hectares.

Quality seedlings for the forest of the future

In 2024, it is expected to sell 53.1 million forest tree seedlings, of which 56 % or 29.6 million seedlings will be used for the regeneration of forests managed by LVM, while 23.5 million forest tree seedlings are planned to be sold to owners of private forests in Latvia and abroad. Of the total number of seedlings, 98 % or 52.2 million are new technology seedlings – container seedlings and plants with an improved root system. For the mechanical protection of seedlings against damage by weevils, it is planned to treat 16.7 million forest tree seedlings, including 11.9 million with a sand-glue mixture and 4.8 million with wax.

In 2024, it is planned to start the construction of seedling storage complexes in Pope and Valmiera nurseries.

Provision of natural diversity and recreational opportunities for tourists

One of the goals set in the LVM strategy is to provide natural diversity and recreation services from the forest ecosystem. To maintain the diversity of nature, in 2024, LVM will continue to implement voluntary measures for the protection of habitats of specially protected species and habitats of EU importance on 24.4 % of the land area managed by LVM. On another 13.2 % of land LVM will carry out its economic activity in compliance with additional environmental conditions, for example, a temporary ban on economic activity in forest areas important for recreation.

Also in 2024, LVM will continue to provide quality monitoring measures for black storks, lesser spotted eagles, white-tailed eagles, ospreys, capercaillies and habitats, as well as take care of forest meadows and floodplain meadows. To minimize the impact of economic activities on the environment in those forest areas where logging machinery has difficult access, the company will continue to use wooden shield carriageways to increase soil bearing capacity.

To provide recreation opportunities for both residents and tourists, LVM plans to maintain 295 free tourist spots throughout Latvia in 2024, including 19 tourist spots adapted for visitors with mobility impairments. EUR 1.8 million are planned for the maintenance and improvement of tourist places in the 2024 budget.

Also, in 2024, it is expected to develop the recreation and environmental awareness infrastructure in the territory of LVM Kalsnava Arboretum and to carry out the renovation of facilities in the LVM Nature Park in Tērvete.

Responsible management of underground resources

In 2024, it is planned to sell 1353 thousand cubic metres of mineral materials and their aggregates, including 1254 thousand cubic metres for external customers. The proportion of certified mineral materials and their aggregates in the total sales volume is planned to account for 100 %. Revenue from the trade of underground resources and products and the rental of mineral deposits to external customers are planned to amount to EUR 7.5 million.

Revenue from the services provided by Business System Solutions to be increased

LVM Business Systems Solutions deals with the development of geospatial information technology solutions. The developed solutions support both LVM's business processes and are also implemented in a number of other companies of various industries for the economic activity needs. Increasing external revenue and providing high-quality services are among the goals set in the budget for this line of business. In 2024, the total planned revenue of the business direction will reach EUR 4.3 million.

Forest infrastructure to be developed and maintained

The total amount of investments in 2024 is planned to be EUR 79.62 million, of which more than a half or 53 % are planned to be invested in the development of forest infrastructure, including the construction, design and construction supervision of forest roads, forest drainage systems and bridges, as well as in making wooden shields. In 2024, it is planned to design forest roads in a total length of 434 kilometres, as well as rebuild or build 274 kilometres.

The scope of forest road repair works provided for in the budget is 241.4 thousand cubic metres, while road maintenance works are to be carried out over a length of 32.8 thousand kilometres. In 2024, the company will clean up the silt of the reclamation ditches in an area of 546.0 thousand cubic metres.

Donations to be made for the development of the forest industry

In accordance with the letter of expectation from the owner of LVM – the Ministry of Agriculture – medium-term operational strategy and in compliance with the current legislation of the Republic of Latvia, LVM plans to participate in the overall development of the forest sector with donations, providing support for scientific and educational projects of the forest sector and projects in the social field. The allocation of the amount of donations for support will be made after the approval of the mid-term operational strategy developed in 2023. The expected amount of donations in 2024 is EUR 0.9 million.