Business news from Ukraine

Cost of Ukrainian timber almost halved due to war and changes in external situation – head of Forest Agency

Due to the war and changes in the external situation, the cost of Ukrainian timber has almost halved, warehouses are full, the processor dictates conditions on the stock exchanges, head of the State Forestry Agency of Ukraine Yuriy Bolohovets described this new situation on the market in a column in NV Business.
“Taking into account the depreciation of the hryvnia against the dollar, the cost is almost halved. Instead of a seller’s market, we are seeing the formation of a buyer’s market. The share of reductions is growing on the exchanges: the processor is already dictating the terms,” he wrote.
Bolohovets clarified that out of the volume of unprocessed wood put up for auction, on average, 60% can be sold on the first attempt, and 50% – processed – 50%.
In his opinion, the reasons for this transformation of the market are the end of the era of “covid” repairs in the United States and other countries, the rise in the price of mortgages and the reduction in construction, the decrease in demand for building materials, in particular, Europeans do not invest in housing due to a jump in lending rates and the risk of war.
“In China, a crisis is brewing in the field of housing construction. Against this background, the Celestial Empire is flooded with a stream of cheap timber from Russia, which is ready to give up its own resources at a big discount. The situation is no better for us in other Asian markets,” the head of the State Forest Agency explained.
He added that the Turkish market, in addition to the Russian one, is also “overwhelmed” with Belarusian products, which then, bypassing the sanctions, enter the European market.
The head of the State Forestry Agency stressed that the main factor in the negative trends in Ukraine is the war and the blocking of ports, without which the country cannot export raw materials to Asia.
“The alternative export route through Gdansk is frankly unprofitable, logistics eats up all income,” Bolokhovets stated.
At the same time, according to him, as a result of the program of anti-crisis measures, forestry enterprises in June reached the volume of harvesting at the level of 90-92% of the previous year. In particular, enterprises in the Chernihiv and Sumy regions, the northern part of the Kiev region have resumed full-fledged work, logistics are being established to raise sales prices in problem regions.
The head of the State Forestry Agency specified that according to the results of the first half of the year, harvesting decreased by 20% (the largest drop in Kyiv, as well as Chernihiv, Sumy, Kharkiv regions, where shelling or hostilities continue). However, due to the transition to auctions for all types of products, revenue increased by UAH 1.45 billion compared to the first half of 2021: 4.4 million cubic meters of raw wood were sold. m in the amount of UAH 8.5 billion, which allowed to increase taxes by UAH 1.2 billion and net profit from UAH 215 million to UAH 350 million.
Speaking about the steps being taken to contain the situation, Bolohovets announced a shift in emphasis to logging, which is in great demand, and primarily to hardwoods: if an almost stable increase in value is recorded for oak during trading on the stock exchange, sometimes by 30-60%, then pine and spruce are bought at a price close to the starting one.
According to him, production will be reoriented to more popular types of products, such as blanks for euro pallets.
He added that sales of firewood are on the rise, as there is a “crazy” demand for firewood, pellets and other raw materials for heating in Europe amid declining interest in construction timber.
The head of the State Forest Agency also called for a more active fight against sanctioned wood from Russia and Belarus on the European market, for revitalizing the domestic market by restoring damaged housing and building temporary timber, which can then be reused.

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Forest Innovation and Analytical Center has begun the creation of the Forestry Startup Fund on behalf of Head of the State Forest Resources Agency of Ukraine Vasyl Kuzovych.
“The main task of the Fund will be the development of a special platform (project exchange) designed to streamline contacts between startup developers and potential investors interested in creating modern high technologies in the timber industry,” the press service of the State Forest Resources Agency said on Saturday.
According to the press service, in the future, the Forestry Startup Fund may become the founder of the first industrial park in the forestry industry, arranged according to the classic three-module scheme, which has proven itself in Silicon Valley and other global centers of innovation.

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The State Forest Resources Agency of Ukraine has launched a new pilot project – an interactive map with wood processing facilities, Head of the agency Andriy Zablotsky has said.
“We want to inform our citizens as much as possible about the legal places for processing wood, as well as identify sawmills that work illegally or use illegally logged wood,” he wrote on his Facebook page on Wednesday.
The head of the State Forest Resources Agency said that the facility were put on the public map according to their geographical coordinate system, information from the electronic wood accounting system and the data provided by Zakarpattia, Sumy, Poltava, Kharkiv, Kirovohrad, Donetsk and Zhytomyr regional administrations.
“The project is a pilot one. Work is underway to fill the geoportal with information. Soon, a feedback form will be created through which users can provide clarification, information about unapplied objects or other informative materials related to wood processing,” Zablotsky said.
In addition, the State Forest Resources Agency is implementing a project named “Forest in a Smartphone”, which allows studying with the general list of logging tickets or checking the legality of logging on the agency’s website on an online map using a computer or a smartphone.
The website also has a service for checking the legality and origin of wood, auction and tender portals. There is an option to check the selling prices for wood, an electronic list of certificates of origin for timber and lumber. In addition, on the website of the State Forest Resources Agency one can follow the monitoring of domestic consumption of wood.
According to Zablotsky, the State Forest Agency Resources plans to transfer the majority of registers and services to a smartphone.

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Ukrainian State Forest Agency logges 3.8 mln cubic meters of wood in Q1 2019
KYIV. April 26 (Interfax-Ukraine) – Enterprises of the State Forest Resources Agency of Ukraine logged 3.8 million cubic meters of wood in the first quarter of 2019, which is 7.8% less year-over-year.
The agency said in a press release on Thursday that total round wood sales in January-March 2019 on the domestic market accounted for 2.9 million cubic meters. No cubic meter of wood was sold on the foreign market.
Forest enterprises over the period saw UAH 3.9 billion of net sales revenue, which is 3% less than a year ago. One of the main reasons for the decline in the indicator is a fall in the demand on the domestic market.
As of April 1, 2019, a total of 1.2 million cubic meters of ending stocks were at warehouses of forest enterprises, which is 32% more compared with ending stocks as of early 2018.
As reported, the enterprises of the agency logged 16.5 mcm of wood (a rise of 3.7% compared with 2017). The state forest agency sold 13.7 mcm of round wood to the domestic market (a rise of 9%).
The total area of forest areas in Ukraine is almost 10.4 million hectares, the forest cover of Ukraine is 15.9%. Some 7.6 million hectares of forests (73% of the forest fund of Ukraine) are subordinate to the State Forest Resources Agency.


The State Agency of Ukraine for Forest Resources plans to launch a pilot project of an electronic register of logging permits in March, Viktor Melnychenko, the director general of the Forestry Innovation Analytical Center at the agency, has said. “This software solution will allow controlling logging permits issued for the use of a certain amount of raw materials. Now this will be a pilot project, and in future, to attract all forest users regardless of subordination, it is necessary to make appropriate changes in the regulatory framework,” he explained.
According to him, the center began the development of an e-register of wood felling licenses in December 2018. The register will allow controlling the annual volume of harvested wood. The expert noted that in the autumn of 2018 the Verkhovna Rada adopted law No. 5495 on preservation of forests, which limits the annual harvesting volume to 25 million cubic meters.
According to Melnychenko, the register will also keep records of documents that were the basis for the issue of logging permits.
A wood felling license is a permit for logging, which contains information about the place and volume of logging. This document is issued by the regional forestry and hunting directorates under the State Forestry Agency.
The total area of forest areas in Ukraine is almost 10.4 million hectares, the forest cover of Ukraine is 15.9%. Some 7.6 million hectares of forests (73% of the forest fund of Ukraine) are subordinate to the State Forestry Agency.

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The State Forest Resources Agency of Ukraine has regenerated 43,700 ha of forests in 2018 with 40,000 ha of clear logging in 2017, the agency has reported on its website.
According to the agency, 1,900 ha of trees planted in 2018 are new forests.
“The volume of forest renewal over the past five years amounted to 251,000 hectares, which is 11% more than the area of clear logging (227,000 hectares),” the State Forest Resources Agency said.
At the same time, the agency said that there is a tendency that the area of degraded plants is expanding, therefore, in the future, an increase in the timber harvesting volume is possible. At the same time, the State Agency is initiating a transition from clear logging to gradual and selective logging systems.
“In recent years, in the Carpathian region, gradual and selective logging systems were used more widely, reaching about 60% of the area,” the agency said.
It indicates that the data are given for forests at the disposal of the State Forest Resources Agency – 7.6 million hectares, or 73% of the Forest Fund of Ukraine.
Data on forests in the temporarily occupied territories of the country is not available.

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