Forestry Legislation Renewal and Implications to Forestry in Finland TTS Työtehoseura – Work Efficiency Institute Managing Director Juha Ojala

Backround: Forestry in Finland Forest land 20.3 million ha Growing stock 2.4 billion m3 Annual increment 105 million m3/a Forest ownership; - Private 61%: 685 000 forest owners - State 21% Share in GDP: Forestry 1.9% Forest based industry 2.0 Forest sector in total 4.9% Gross stumpage earnings € 1.7-2.0 billion/a (for forest owners) Costs of silvicultural and forest improvement work € 200-300 million /a Gross value of the production of forest industries € 20 billion /a Total goods exports 11-12 bill. €/a (=24% of the total value)

Active Forest Policy Since the 1960s Annual growth and harvesting of forests 1930 - 2012 Increased investments in silviculture since 1960’s Potential: total harvesting can be increased by 10-15 million m3/a Annual growth Drain Pine Spruce Increment by treespecies Broadleaved 3 3

Active Forest Policy Since the 1960s Total growing stock volume has increased 50% in 50 years Total Pine Spruce Broadleaved 4 4

The Overhaul of Forest Legislation 2011- Programme of Prime Minister Jyrki Katainen’s Government (2011): “The economic base of forestry and forest industry must be reformed through the overhaul of forest legislation, securing both biodiversity and the multiple use of nature and the interests of the national economy, users of wood, and forest owners. The reform will promote sustainable and increasingly diversified forest management and forest regeneration”. Finland's forest resources allow for the increase in the sustainable use of wood as a raw material. This requires active utilisation of forests, a functioning wood and service market and new innovations and investment.

Background of the Overhaul of Forest Legislation The main goal was to: Create good preconditions for the versatile use of forests and for new business activities and new investments Improve the profitability of forestry Create equal competitive positions to all actors in the market Secure the growth and biodiversity of forests A key method in the overhaul was the reduction of detailed regulation targeting forest owners and actors. Regulations that unnecessarily limit the economic utilization of forests or the development of the service markets should be removed. In Finland the use of forest has been regulated by the state authorities already for centuries. Before reform there was comprehensive and strict regulation of e.g. regeneration age and size, tree species to be planted, harvesting methods, market restrictions etc …

Background of the Overhaul of Forest Legislation … Finland has about 685 000 forest owners with diverse goals and values how to utilize their forests. Forest owners are the decision-makers in their own forests. Some active forest owners emphasize the economic output of forests more strongly than before, but many put more emphasis on factors such as the recreational use of forests, as well as values related to the landscape and diversity, and the combinations of these goals. Changed attitudes of forest owners are bringing about a new kind of demand also on the forest service market. Some forest owners do not need any special advice or promotion of their interests in caring for their own forests.

Comprehensive Reform of Forest Legislation 2011-2016 Reform of the Forest Act 1.1.2014 Reform of the Forest Management Association Act 2014-2015 Reform of forest administration 2012 – 2016: Finnish Forestry Centre 2012 and 2015 – Reform of the role and organization - Business activities privatized 2016 Forestry Development Centre Tapio 2014 -> limited market-driven company (state owned) Metsähallitus (State Forests) - State enterprise; forestry business unit incorporated 2016 Act on the Financing of Sustainable Forestry 2014 - 2015 (state aid) Forest Damages Act 1.1.2014 Timber Measurement Act 1.7.2013 and 1.1.2014 The Act on the Placing on the Market of Timber and Timber Products

Case - The Forest Act Strict regulation in managed forests has previously imposed restrictions on the appropriate care for forests and has weakened the profitability of forestry. In addition, the lack of alternatives has sometimes left forests completely outside active care. The renewed Forest Act gives forest owners a more diverse selection of forestry methods and alternatives for growing forests - more freedom to choose for forest owners. Also more responsibility to forest owners. The Forest Act defines the minimum obligations of forest owners in the care of their forests and the minimum restrictions on forest use. Freedom of choice is needed so that the varied goals of forest owners can be better adapted to one another: The Forest Act now permits growing forest with diverse age structure. Any restrictions for tree size and stand age are no longer required to allow regeneration cuttings. A number of habitats of special importance were added whose characteristics need to be preserved.

Case - The Forest Management Associations Act There are 80 forest management associations with a total of about 280,000 members. The purpose of forest management associations is to promote the profitability of forestry practised by their members. In private forests the associations implement: 80% of silvicultural work 70% of timber sales plans 40% of timber sales on behalf of forest owners Previously it was obligatory to forest owners to be a member (statutory fee). Forest management associations had also restrictions on how to compete in the market (not allowed to buy and sell timber) Reform: No statutory fees to forest owners, voluntary membership and no longer restrictions to associations to compete in the service market –> equal competitive positions and freedom to choose service provider

Conclusion - The Reform of Forest Legislation More freedom – less regulation More responsibility Better motivation Better profitability New innovations New investments to forestry and forest based industry

What has happened … Forest industry investments in Finland 2009 - 2016 SOURCE: Finnish Forest Industries, Statistics Finland, forecast Confederation of Finnish Industries, FFIF

What has happened … Investments and Additional demand for wood During 2005 – 2012 reductions were huge in the pulp and paper industry as well as in the sawmill industry During recent years new investment plans has been published: New demand: Logs ~1,5 Mm3 Pulpwood ~20 Mm3 Energywood ~4-5 Mm3 Recent and confirmed investments Preliminary investment assessments SOURCE: Finnish Forest Industries, Statistics Finland, forecast Confederation of Finnish Industries, FFIF

Thank You! juha.ojala@tts.fi

Additional information: Finnish Forest Center The Finnish Forest Centre is a state-funded organization covering the whole country promoting forestry and related livelihoods, advising landowners on how to care for and benefit from their forests and the ecosystems therein, collecting and sharing data related to Finland's forests and enforcing forestry legislation. Metsään.fi-eServices offer the latest information directly to forest owners on their properties. The Finnish Forest Centre operates under the guidance of Ministry of Agriculture and Forestry.

Additional information: Metsähallitus - State Forests Metsähallitus is a state-owned enterprise that runs business activities while also fulfilling many public administration duties. Metsähallitus administers more than 12 million hectares of state-owned land and water areas. Metsähallitus has the challenging responsibility of managing and using these areas in a way that benefits Finnish society to the greatest extent possible. Metsähallitus operates under the guidance of Ministry of Agriculture and Forestry. http://www.metsa.fi/web/en/metsahallitus

Additional information: Forest Management Associations Organization for forest owners Finland is a land of family forests. Two-thirds of the Finnish forests are owned and managed by private individuals. The Forest Management Associations serve forest owners in practical forestry issues and look after the interests of forest owners at the local level. The organizations for forest owners look after the regional interests. There are 280 000 members in the associations. https://www.mtk.fi/en_GB/

Additional information: Tapio Oy - Forestry Development Centre Tapio consulting services provide solutions for efficent and sustainable forest management and bioeconomy. Tapio provides services both for public and private sector. Tapio has over a century of experience in developing sustainable forest management.