*Reduced share of timber costs in industry's total cost structure

According to recent statements of the wood processing industry there is very little interest in investing in Finland, nor in any other Nordic country.

Increased timber prices have been forwarded as one reason for this attitude. However, statistics from the Finnish Forest Research Institute give a completely different picture.

During the last years timber prices in Finland have shown a decreasing trend, calculated as part of industry's relative cost structure. Calculated in 2002 money value total costs for the pulp and paper industry were 12.6 billion euro and for the wood product industry 5.1 billion euro. Timber costs decreased in both branches in real terms. One reason is the price decrease of all kinds of domestic timber from 2002 levels. For example, the real term prices of timber from private forests deceased by 3.4 per cent last year.

The price reduction was less important for the pulp and paper industry than for the wood product industry. In respect of the latter branch, reasons for the reduced cost of timber were price decreases of domestic timber, more effective use of raw materials and considerably increased use of imported timber. Felling in privately owned Finnish forests has not increased since 1998. Industry has imported timber to cover its increasing raw material needs.

For further information, please contact researcher Katja Packalen, katja.packalen@metla.fi

See also the attached graph. 

Attachment:
	Cost structure of the pulp and paper industry