The forest restitution process in Lithuania created more than 200,000 private forest owners, each with a very small forest holding (average of 5 ha). Due to these small areas, forest management is complicated and relatively expensive. Furthermore, this problem is magnified because most forest owners have limited or no knowledge about forest management and usually live far from their property.
In 1998, the first forest owners’ co-operative started activities. In a very short time, several co-operatives developed, as the industrial demand for roundwood and the demand for forestry services (from owners) rapidly increased. By 2004, a network of small companies and forestry co-operatives was established under the Forest Owners Association of Lithuania. The volume of roundwood marketed through this network increased from only 30,000 m3 in 2001, to 500,000 m3 by 2004. This is equal to a 20 percent share of the roundwood supply from private forests or 10 percent of total Lithuanian roundwood supply.
Currently, the network comprises more than 20 small companies and co-operatives, employing 100 skilled foresters that offer a full range of forestry services to more than 4,000 forest owners. The network operates on two levels. In the field, co-operatives advise local forest owners and consolidate production volumes. These are then marketed through a roundwood trading company that specialises in supplying the largest buyers.
Forest owners can participate in the network in a number of different ways. They can be a full member of a cooperative, they can sign a long-term forest management agreement, they can sell standing timber (or a whole forest) through the network or they can simply buy forestry services. The network has become the largest roundwood supplier in Lithuania, because it achieves sales prices that are about 10 percent higher than the market average (due to better bargaining power at the large scale). These benefits are then passed back to the forest owner. For comparison, before the co-operative movement took off, roundwood from private forests sold for 20 percent less than the market average.
The outlook for the network is very positive. The network has credibility with the largest buyers in the market. The network is also looking at future alliances, co-operation and vertical integration to lead to further benefits that can be passed on to the small-scale forest owners who are members of the co-operatives.
