The State Enterprise “Forests of Ukraine” has approved a new Procedure for the use of timber, the CEO of the state enterprise Yuriy Bolokhovets said on his Facebook page.
He reminded that since its inception, the State Enterprise “Forests of Ukraine” has been selling the entire volume of timber at transparent and competitive exchange auctions. The market itself forms prices, which both rise and fall depending on market conditions.
The CEO said that a dialog with business had been going on for two years. The mechanisms of pricing, lot formation, and bidding have been partially improved. Auctions were introduced using a mechanism of phased price formation (first an increase, then a decrease). Weighted average prices by region are publicly available on the company’s website.
“Our key goal was to create truly market-based flexible algorithms that would promote market openness for all segments (from small to large) and balance the interests of the state and private business. The timber use procedure developed by the State Enterprise “Forests of Ukraine” is based on these principles,” explained Bolokhovets.
According to him, the innovations are aimed at creating even more stable working conditions for producers and minimizing price imbalances that sometimes arise as a result of uneven demand.
The revised timber sales procedure introduces six-month long-term fixed-price contracts that will allow businesses to plan their operations.
The auction will start in the first decade of November. More than 450 thousand cubic meters of timber will be offered for sale, including about 200 thousand cubic meters of roundwood and more than 250 thousand cubic meters of firewood. Lot sizes range from 3 to 12 thousand cubic meters.
In connection with the reorganization of the State Enterprise “Forests of Ukraine”, the newly formed branches (current forest offices) will form lots for sale, and the specific lot will be linked to the superforestry, which will be formed instead of the currently operating branches.
The starting prices of auctions for unprocessed timber of the branch will be set on the basis of the approved price list for each individual assortment in terms of species (group of species), quality class, diameter group, length and delivery basis.
The price list will be based on the current market value of the basic assortment prevailing in the forest plantations of the branch. The price of all other assortments (by species (group of species), quality class, diameter group, length and delivery basis) will be determined through a single scale of price coefficients, taking into account the dimensional and quality characteristics of a particular assortment.
Clear criteria for the possibility and sequence of auctions using the mechanism of stepwise price formation (first for an increase, then for a decrease) will be established, as well as standards for the permissible percentage price reduction during auctions.
“Thanks to the changes, there will no longer be situations when lower-quality varieties are put up for auction at a higher price because there was a situationally high demand for it last quarter. Prices will remain market-based, but balanced and fair. The business will have a clear understanding of the conditions under which auctions are scheduled using a mechanism of phased price formation (first price increase, then price reduction),” explained the CEO of the State Enterprise ‘Forests of Ukraine’ and expressed confidence that the predictability of the market will contribute to the development of Ukrainian woodworking.
As reported, Ukraine launched a forestry reform in 2016. It has already introduced the sale of raw wood at electronic auctions. Since 2021, an interactive map of wood processing facilities has been operating in a test mode in a number of regions.
The industry has implemented the Forest in a Smartphone project, which contains a list of logging tickets for timber harvesting and allows you to check the legality of logging on the agency’s online map.
On June 1, 2023, Ukraine launched a pilot for the electronic issuance of logging tickets and certificates of origin of timber. In addition, the State Enterprise “Forests of Ukraine” has launched a pilot project to procure timber harvesting services through the electronic platform Prozorro.
