Family Forestry and Forest Owners’ Organisations in Finland Tartu, Estonia 15 th March 2012 Janne Näräkkä, Forestry Adviser Central Union of Agricultural Producers and Forest Owners MTK

Content of the presentation Family Forestry in Finland Forest Owners’ Organisation in Finland Forest Management Associations Jointly-owned forests in Finland 6/5/20168 March 2010 MTK/Forestry Group 2

33 Structure of Land Use in Finland Total land area thous.ha, forest land area thous.ha Source: Finnish Forest Research Institute Forest land 66 % Other wooded land 9 % Agricultural land 9 % Other land 16 %

4 Who Owns Finnish Forest Land? Share of forest area, % Private families 62 % Source: Finnish Forest Research Institute  private forest holdings forest owners  Average size 31 hectares Entrepreneurs 3,7% Wage & salary earners 15,5% Pensioners 19,8% Farmers 20,4% Other private 2,4% Forest Industry 8,9% State 24,4% Others 4,9%

55 Forest Ownership Structure in Finland (according to an inventory of ) * = according to an inventory of Source: Finnish Forest Research Institute

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7 7 An average age of private forest owners is 60 years Average age years years years An average age of new forest owners is 52 years Source: Forest owner 2010, Finnish Forest Research Institute

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99 Average size in Finland 31,2 ha (Forest holdings with forestry fee ) Average Size of Private Forest Holdings, ha

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11 Family Forestry is characterised by Multiobjectivity → family forestry incorporates multiple values and functions Over-generational thinking → the needs of future generations are constantly borne in mind and the forest holding is handed down to the next generation in a further improved condition Various benefits and services provided to the society → e.g. Everyman's Right - the forests and waters are free for everyone to visit and enjoy

12 Family forest owners’ priorities MTK promotes sustainable family forestry in accordance with the following principles: Landowners’ constitutional rights are respected Forest owners have the right and the opportunity to manage and use their forests in compliance with their objectives Forestry is economically profitable Forests are managed in compliance with the principles of sustainable forestry

13 Finnish forest sector is the backbone of Finnish economy Forest sector has always played a key role in Finnish economy GDP share of the forest-based sector 5.9% (2008), 9.5 bn.€ Employs people Finnish forest-based sector is heavily export-oriented – over 90% of paper and paperboard is exported and over 60% of sawn wood 20% of net export revenues comes from forest industry Forest sector is extremely important in rural areas  in many areas % of regional GDP comes from forest sector Gross stumpage earnings (private forest owners) ca. 1.5 billion € annually – this means ca € / forest holding Annual variation of stumpage earnings between 1 and 2 billion €

14 Wood production is the backbone of sustainable forestry

15 80% of domestic roundwood comes from private forests

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18 Forest owners’ organisation in Finland

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20 Background of forest owners’ organisations Slash and burn –agriculture and emerging forest industry led to vast decrease of Finnish forest resources in the middle of 19 th century In 1859 a first governmental forest management authority Metsähallitus (State Forest and Park Services) was established In 1886 first Forest Act was passed aiming at prohibiting the destruction of forests and safeguarding regeneration after fellings The fear of decreasing forest resources and the lack of negotiation power towards forest industry led to establishment of forest owners’ first Forest Management Association in 1906 In 1920’s - after Finland’s independence in tenant farmers were given the right to buy the land they had held and managed under their tenancy agreements  Beginning of Finnish Family Forestry

21 THE OFFICE OF THE CENTRAL UNION OF AGRICULTURAL PRODUCERS AND FOREST OWNERS Maaseudun Tulevaisuus (Newspaper) RURAL ENTREPRENEURS LOCAL FARMERS ASSOCIATIONS (383) REGIONAL FOREST OWNERS’ UNIONS (8) REGIONAL FARMERS UNIONS (14) MEMBERS FOREST OWNERS FARMERS FUR BREEDERS´ ASSOCIATION The Organization of MTK 2011 FOREST MANAGEMENT ASSOCIATIONS (FMA) (103) Effective organisation of forest owners is the key

22 Organization of Private Forest Owners which have Forest Owners Members of Forest Management Associations Forest Holdings, Forest Management Associations 103 Regional Forest Owners’ Unions 8 8 Forestry Council of the Central Union of Agricultural Producers and Forest Owners (MTK) MTK’s Forestry Board 9 members 42 members Protection of forest owners’ interests at all levels: - local - regional - national & international

23 Forest Policy Organisation: Central Union of Agricultural Producers and Forest Owners (MTK) A national central organisation of private forest owners to look after the private forest owners' interests in timber trade to influence forest policy legislation to guide the activities of the Regional Forest Owners' Unions, to protect the interests of the Forest Management Associations and to develop co- operation between forest owners MTK has no position to oblige FO Unions or FMAs – all co-operation is based on voluntariness

24 Forest Policy Organisation: Regional Forest Owners’ Unions Regional central organs for local Forest Management Associations to promote private forestry and to protect private forest owners' interests to guide and develop the activities of the Forest Management Associations and co-operation between forest owners to provide guidance and to assist in marketing of forest products The Unions are mainly financed by Forest Management Associations’s membership fees. MTK and Forest Owners’ Unions are not granted any state subsidies

25 Forest Management Associations

26 Forest Policy Organisation Forest Management Associations Currently 103 associations covering the whole country and every municipality  fusions decrease the amount of FMAs Employ 1000 officials and 620 permanent forest workers Employ also high number of contractors and entrepreneurs Forest owners’ service organisation on local level: to promote forest management and utilization as well as other objectives that the forest owners have for their forest ownership to promote the profitability of forestry to offer training and guidance in forestry to forest owners to protect the interests of private forest owners by giving them professional assistance practical organizer of group certification

27 Forest Policy Organisation Forest Management Associations FMAs are working in a close co-operation with the forest owners in all matters related to forests: forest management services (harvesting, regeneration, ditching etc.) training and planning services timber sales services 80% of the forest management activities in private forests are carried out by FMAs 70% of preliminary planning of timber sales Mandatory forest management fee for holdings over 4 hectares  ca. 25 – 30 million €/year for FMA advisory services = ca. 12% of FMA’s total annual turnover

The Purpose of Forest Management Associations FMA law (534/98, 1§) : FMA is the union of forest owners, the purpose of which is… to advance the profitability of forestry practiced by the forest owner and to advance other goals forest owners have on their forestry and to advance economically, ecologically and socially sustainable forest management and use In this order!

Forest Management Associations FMAs are voluntarily founded unions, administrated and funded by forest owners Law (1998 / 534) and act (1998 / 1227) about the FMAs regulate the operation of FMAs The members are, unless they decline the membership, forest owners who have the tenure right to a forest located in association’s territory and who are under the obligation to pay the forest management fee (forest area more than 4/7/12 hectares) The operation of FMAs divided into two blocks: acitivities financed by forest management fee and business activities  have to be separated! FMA law and FMA act order among other things the purpose, membership, operation area, decision making procedure, forest management fee, use of funds and release of membership Law also orders how FMAs are allowed to operate in timber markets and in timber harvesting

Forest management fee Forest owners are entitled to services of FMA by paying the forest management fee Fee is legal, tax-like payment which tax authority collects from forest owners and accounts to FMAs Forest owner does not have to pay the fee if his/her forest area is under 12 hectares in Lapland province, under 7 hectares in Oulu province and under 4 hectares elsewhere in Finland Forest management fee consists of basic fee and hectare fee: Basic fee: 70 % of the average stumpage price /m3 of whole country from last 3 years Hectare fee: FMA can decide. Depends on the geographical location of the FMA. At highest can be 1,5 % -11 % of the average stumpage price /m3 of whole country from last 3 years For example for 30 hectare forest holding in Southern Finland around 100 €/year ~ holdings pay the fee  total million euro/year Fee is decided for each year separately Fee secures that all forest owners in all parts of Finland have the equal right to get advisory and forest management services Important for small FMAs, for bigger associations not that relevant anymore

Amount of Forest management Associations

Renewal of Forest Management Association law Renewal of FMA law is mentioned in the governmental programme of the current government Purpose: secure level playing field for different actors on forest service markets  obligatory forest management fee criticized by other service providers Forest owner’s freedom of choice another central element: Should forest owner be automatically member of FMA? Easier requirements for resigning from the FMA membership Forest owner’s right to choose FMA The Minister of Agriculture and Forestry will give his recommendation in coming months and some changes are inevitable In case obligatory financing will be abolished then also society’s requirements for FMAs have to be removed!!!

36 Finnish forestry has been a success story – FMAs have Future?

37 Forest owners’ perceptions of Forest Management Associations

41 Jointly owned forests in Finland

Jointly owned forest Jointly owned forest = forest area which is shared by more than one forest holding and on which sustainable forestry is practised for the good of joint owners The first jointly owned forests were established in 1886 to prevent overcuttings of forests. The majority were and are still founded because of general scattering of land to secure reasonable forest management for all joint owners. In Finland there are over 230 jof:s covering over ha and there are over owners. Average size is 320 hectares ranging from 19 to hectares. Jof boom going on: 2011 over 50 jof:s were established Cirka 4 % of the area of private owned forests in Finland  might grow up to 15 % State supports by tax relief in timber selling and lower fees when inhereted forest is attached to jof  objective is to overcome the problem of small and scattered holdings and improve forest holding structure Partners and administrative committee take care of the administration of the jof

Partners Approve the regulation, which is confirmed by regional Forestry Centre Choose the members of administrative committee Approve the annual report Confirm the financial statement and admit discharge from liability Decide on the use of surplus Confirm the plan of action and the budget

Administrative committee Organises everyday administration and operation Is responsible for forest management plan, the plan of action and the budget as far as it doesn’t belong to the tasks of the Partners Decides on timber trade Decides on hunting and fishing rights Takes care of financial recources and other property of Partners Prepares the annual report and financial statement Decides on the attachment of new holdings to the jof

The benefits of jointly owned forests Economical forest ownership Regular and steady revenues from fellings Easy choice to old owners and owners who live far away from their forests Sustainable forestry (necessity of forest management plan)

46 THANK YOU FOR YOUR ATTENTION!