2016

JSC “Latvia’s State Forests” has been Managing State Forests for 17 Years Already

JSC “Latvia’s State Forests” (LVM) was established on October 28, 1999. Since that time, the company has grown, developed, and now, with its innovative system, it has become an expert in forest management and is an important part of the society. The company also gives considerable income to the state budget.

“During the past 17 years, LVM as a decent and careful landlord by managing sustainably a quarter of state forest area has reached a rapid growth. It was ensured by the company’s management and educated, professional, united, and motivated staff, which is the biggest and most valuable LVM asset. I am satisfied with the work done by LVM and I am sure that further work will be no less successful and next generations will receive even more beautiful and productive state forests”, says Minister of Agriculture Jānis Dūklavs.

Compared with the beginning, LVM turnover has increased from 24 million euros to up to 11 times bigger number, reaching 264 million euro turnover in 2015. By investing almost 500 million euros in enhancing the value of the forest and its development, LVM has paid almost 840 million euros in the budget of the state and many municipalities. In addition to significant financial indicators, state-owned forests give more than 7000 jobs all over Latvia. Logging, road construction, forest thinning and other sizable forest management works are outsourced by LVM, thereby ensuring fair market competition, high quality of work and timely work execution. For forestry activities, LVM attracts around 850 professional companies with more than 6000 workers per year.

During the 17 years, the company has paid one billion euros in dividends to the state. “The aim of the company is to ensure as much income as possible to its owner – the state by efficiently and sustainably managing state forests. The fact that the owner has set earning from forestry as one of its basic principles has been a good action mandate and good LVM business philosophy maker. However, during the past six years a number of decisions have been made that do not facilitate company’s responsibilities. For example, the requirement to pay 90% of the income is an extremely high indicator that affects the company's ability to invest in its development, which in turn has a negative effect on our profitability. It is a much higher indicator than in private companies. We would be grateful if the owner clearly explained the dividend policy because each year it is promised to reduce the 90% dividend payment. We have decreased two times the level of investment during these years, for that reason production costs are rising year by year, in turn the profit keeps dropping”, says LVM President Roberts Strīpnieks.

Forestry is the principal activity for LVM; nevertheless, the company also develops other types of activity: it provides hunting and recreational services, acquires bred seeds and seedlings for reforestation. A great part of LVM products is also exported to foreign countries.

The President of LVM comments the future plans and development of the company: “We must finish the infrastructure (roads, drainage systems, bridges) development program because in this field we are lagging behind other countries. In the coming decades we will experience robotization development in forest management, including unmanned forest machinery development. It is impossible to do forest management without human help, but we will protect our workers from the most dangerous works. After 30 years, we will see the beautiful forests created by LVM. We will see the genetic potential of our planted forest that is based on decades-long contribution of Latvian scientists. I believe that in 30 years, people will have a better understanding of how their pension funds, salary, construction of a new hospital or school is also connected with our work in the forest. They will also be able to assess how fast and in what quality the forests are grown. I am certain that wood processing in our country will continue to develop rapidly and after 30 years, wooden houses produced in Latvia will become a globally recognized brand and the quality standard that even Chinese manufacturers will try to make duplicates of”.