Business news from Ukraine


Ukrainian Sawmills LLC (Kostopil, Rivne region), which produces sawn timber, furniture panels and semifinished products, declares a critical situation in connection with the failure to deliver the full volume of logs by state-run forestry enterprises legally acquired by the company at open auctions, the company has said on its Facebook page.
“We, the newest sawmill, launched at the end of 2017, are now on the brink of survival. The most important problem is providing raw materials in full, or rather begging legally acquired raw materials from state-owned forestry enterprises. According to the results of the third quarter of 2020 (left only three days before it ends), the forestry enterprises of Zhytomyr and Volyn regions, as well as some forestry enterprises of Rivne region supplied us with less than 50% of the purchased wood,” the company said on Monday, September 28.
Ukrainian Sawmills said that they participate in all auctions for the purchase of coniferous sawlogs, since this year they decided to fully utilize the existing design capacities.
“We will demand additional supplies of logs. But who will compensate us for the forced downtime, loss of business reputation due to unshipped products to buyers and possible penalties for our failure to fulfill obligations?” the company said.
In addition, the company drew attention to the fact that some auctions are announced in such a way and at such a time that only those “for whom the auction is specially held” can learn about them.
“It turns out that we already have a system of shadow auctions so that the right raw materials go to the right people, and not to those who want to buy. Formally, everything seems to be honest: there is an official announcement and an auction is being held (print screen is attached). But the problem is the one for whom this auction is specially held, without providing for other participants, can only know about it,” the company said.
Ukrainian Sawmills appeal to the Office of the President, the Cabinet of Ministers, the State Forest Resources Agency and the regional forestry and hunting departments with questions about holding such auctions, at what prices they buy raw materials, whether there are any abuses and unlawful benefits.
Ukrainian Sawmills LLC was registered in September 2014 in Kostopil. According to the public register, 100% of the charter capital is owned by the company Ukresta Holdings Limited, registered in Cyprus.



President of Ukraine Volodymyr Zelensky has signed the law “On Amendments to the Forest Code of Ukraine regarding the National Forest Inventory” No. 643-IX, which the Verkhovna Rada adopted on June 2, 2020.
“The law provides for the creation in Ukraine of a new system of collecting reasonable data on the forest fund for the purpose of further planning, forestry, the state forest cadastre, forest monitoring and the like,” the head of state’s website reported on Tuesday.
The document introduces the concept of a national forest inventory, defines its purpose and sources of financing.
The procedure for conducting a national forest inventory is approved by the Cabinet of Ministers of Ukraine, it will be carried out at the expense of the state budget or other sources not prohibited by law.
According to the law, persons authorized to conduct a national forest inventory during examinations have the right to be on land plots of the forest fund of Ukraine, except as otherwise provided by law.
Information obtained from the results of the national forest inventory is entered into the state land cadastre.
The law comes into force on the day after its publication.

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Latschbacher Group, together with Austrian partners, offers ground-based laser scanning technology for forest inventory in Ukraine, as well as studies based on simulation of forest growth, Volodymyr Molochko, a specialist in accounting harvested forest and solutions for tracking forest supply chains at Timber & Equipment GmbH from Latschbacher Group, has reported.
“We prepared calculations of the project. We’ve performed various calculations that will help soberly evaluate different ways of conducting an inventory. According to our estimates, the cost of implementing the national forest inventory in Ukraine using modern methods with laser technology will be about EUR 10 million,” he said in an interview with the Interfax-Ukraine agency.
Gunther Bronner, a specialist in accounting technologies for growing forests at Umweltdata GmbH, explained that traditionally the national forest inventory is carried out using standard methods based on laying sampling points and creating special teams.
According to data from Austrian experts, Ukraine plans to carry out the national forest inventory using standard methods, which will take five years and substantially more funds. In particular, they noted it is necessary to lay more than 16,000 sample points across the entire forest area in Ukraine, process 400 points a month, which will require at least nine teams of two people each.
“If to look at the costs spent on conducting the national forest inventory, the time and effort spent on it, and compare the benefits actually gained from this with the capabilities of laser scanning from an airplane, there will be no other alternative but to get into a deep depression,” Molochko believes.
According to Bronner, several countries, in particular Austria and Ireland, use an alternative method of laser scanning, and the experience of Austria with mixed forests and mountainous terrain similar to those in Ukraine would be very useful for Ukraine. He added that new laser technologies allow to significantly expand knowledge about the growing forest, the boundaries of forest areas, the topography, species and assortment composition, get a comprehensive model of crown heights, as well as identify forest areas infected by the beetle and plan its harvesting, build forest roads and get the maximum economic effect.
“A thorough mapping of forest resources will open the way to a quality forest management system. We estimate losses from inefficient forest management in Ukraine at tens of millions of euros per year, and these are optimistic figures,” Molochko said.
He specified that the forest area in Ukraine is approximately 10.4 million hectares, which is comparable to Poland, where the forest area is about 9.2 million hectares or Germany, which has 10.7 million hectares of forests. However, legal timber harvesting in Ukraine is about 20 million cubic meters per year, while in Poland and Germany the figure is about 40 million cubic meters and 64 million cubic meters respectively.

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Wood industry of Ukraine from January 2019 switched to new national wood standards harmonized with the European ones, the State Forest Resources Agency of Ukraine has reported.
According to the report, from 2019, commercial (round) timber will be distributed into four quality classes (A-D) without mentioning the purpose of using it. A type timber is the highest class timber, B – medium class timber, C – below medium with minor defects and D – timber that does not meet the requirements of A-C types, but could be used for lumber. The rest of round timber is divided into industrial (length of 2-4 meters, could be used for production of chips or fuel) and nonindustrial (up to 2 meters of length, could be used for fuel). The agency said that earlier timber was divided into three types and types depending on the purpose of using it.
The agency said that in Ukraine there are additional technical conditions for classification of those types of timber that are not regulated in Europe due to the fact that their volume is rather small in Europe (birch, alder, hornbeam, acacia, aspen, linden, cherry and other trees.)
In addition, from January 1, 2019, internal consumption of Ukrainian round logs is restricted to 25 million cubic meters a year. The law amending some Ukrainian laws regarding preservation of Ukrainian forests and preventing illegal imports of logs contains this requirement.
According to the law, punishment for illegal logging and destruction of forest and young trees is toughened from January 1, 2019.

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