1. Prof. Dr. Wilfried Puwein Wood Market in Poland towards Stabilisation Price Setting Systems in Austria Poznan, 4 th december 2007

2. 1 Dec. 4 th, 2007 In a market economy the Invisible Hand' is setting the price

3. 2 Dec. 4 th, 2007 Price setting systems in Austria The Austrian wood market Supply Demand Price Settings In general Saw logs Pulpwood Fuelwood Time series components of prices Trend – cyclical – seasonal - irregular Towards perfect competition Control of takeovers and mergers Outlaw of anti-competitive agreements Price information systems

4. 3 Dec. 4 th, 2007 The Austrian wood market Roundwood supply Domestic supply ~ 16 million m³/year Imports ~ 8.5 million m³/year 54% wood land owners < 200 ha 13% OeBF-AG¹) 33% wood land owners 200 ha 1 ) owned by the Federal Republic Domestic supply, shares

5. 4 Dec. 4 th, 2007 Roundwood supply Woodland owners 200 ha 1 439 enterprises: private, co-operations, communities, Länder (provinces), R.C. church, monasteries Ø 683 ha/enterprise

6. 5 Dec. 4 th, 2007 Roundwood supply Woodland owners < 200 ha 148 324 enterprises: 40% traditional forest farmers, 28% non farming wood land owners with connection to rural life, 32% urban wood land owners Ø 11 ha/enterprise 30% (2.5 million m³) of the wood harvest is managed by Waldverbände

7. 6 Dec. 4 th, 2007 The Austrian wood market Roundwood demand Domestic demand ~ 23.5 million m³/year Exports ~ 1.0 million m³/year 10% pulp industry 4% wood based panel industry 71% saw milling industry 15% fuelwood Domestic demand, shares

8. 7 Dec. 4 th, 2007 Roundwood demand Saw milling industry 1 400 firms (but 65% sawnwood production share of 10 biggest mills) Pulp industry 7 firms Wood based panel industry 10 firms Fuelwood about 2 million households with possibilities for wood fire (fire place automatic pellet heating)

9. 8 Dec. 4 th, 2007 Price setting in general

10. 9 Dec. 4 th, 2007 Monthly Prices of Soft Roundwood and Export Sawnwood Source: Statistik Austria, WIFO calculations. P DSL =9.05+0,16*EPS t +0,06*EPS t-1 R²=0,86

11. 10 Dec. 4 th, 2007 Monthly Prices of Soft Pulpwood and Export Pulp Source: Statistik Austria, WIFO calculations. P DPW =22,11+0,025*EPP t R²=0,20

12. 11 Dec. 4 th, 2007 Annual Average Prices of Soft Roundwood and Export Sawnwood Source: Statistik Austria, WIFO calculations.

13. 12 Dec. 4 th, 2007 Annual Average Prices of Soft Pulpwood and Pulp Source: Statistik Austria, WIFO calculations.

14. 13 Dec. 4 th, 2007 Annual Average Prices of Fuelwood, Crude Oil and Pulpwood Source: Statistik Austria, WIFO calculations.

15. 14 Dec. 4 th, 2007 Price Development, yearly Averages Source: Statistik Austria, WIFO calculations.

16. 15 Dec. 4 th, 2007 Soft Saw Log Price

17. 16 Dec. 4 th, 2007 Soft Pulpwood Price

18. 17 Dec. 4 th, 2007 Fuelwood (beech) Price

19. 18 Dec. 4 th, 2007 Cyclical Price Fluctuations and Trend, 1970-2006 Saw logs 13.8 +0.5 Pulpwood 15.5 –0.7 Fuelwood 23.5 +3.0 Coefficient of Variation (moving average deviation from trend) Average annual change in %

20. 19 Dec. 4 th, 2007 Seasonality in the Price Index Source: WIFO calculations.

21. 20 Dec. 4 th, 2007 Price setting in practice Timber Sale Contracts Contract period 0-12 month Price Fixed price Price Index

22. 21 Dec. 4 th, 2007 Methods of marketing timber Enterprises < 200 ha 200 ha OeBF-AG In % Selling stumpage ? 12 8 Selling harvested timber roadside 81? 76 19 cif mill 19? 12 73 Source: BMLFUW, Österreichischer Waldbericht, Datensammlung; OeBF-AG.

23. 22 Dec. 4 th, 2007 Methods of marketing timber OeBF-AG Source: OeBF-AG.

24. 23 Dec. 4 th, 2007 Methods of sale and price setting Sale Lump-Sum-Sales – in Austria against the forest law Sale-By-Unit Price setting Oral bid or negotiations Written Sealed Bids Submissions for veneer logs

25. 24 Dec. 4 th, 2007 Tendencies towards oligopolistic demand Concentration tendencies in wood processing firms Oligopolistic industries can manipulate the domestic raw wood price (by collusion) Foreign industries transport costs/cif price relation

26. 25 Dec. 4 th, 2007 Measures against oligopolistic demand Control of takeovers and mergers Outlaw of anti-competitive agreements EU-Competition Law Collusion and cartels Dominance and monopoly Mergers and acquisitions

27. 26 Dec. 4 th, 2007 Problem of Asymmetric Information Setting the price Local price information World market information Forecasts: housing starts, business cycle … ?

28. 27 Dec. 4 th, 2007 Strengthening the position of wood suppliers Advancement for Waldverbände Price information system Benchmark - Tyrolean System Report System via Internet: Forest owners Forest Service of the district Forest Service of provincial government: Monthly report on prices and harvest recommendations