The Ministry of Climate's decision to cut logging in state forests by 10 percent will mainly affect sawmills, but may hurt the entire timber sector's competitiveness.

Although Barrus, a timber industry company based in Võru County and one of the largest in Southeastern Estonia, is investing nearly €2 million this year to automate its log sorting line, CEO Martti Kork says such investments could become increasingly difficult in the future if raw materials must be sourced from abroad at higher prices.

"The first half of last year was relatively competitive in terms of pricing, but in the second half we began to see the price of pine saw logs rise in Estonia. In Finland, by contrast, we saw a sharp drop — prices there have fallen by 20 percent, while in Estonia they've increased by a similar margin. If we add to that the ministry's decision — a request or an order — for the State Forest Management Centre (RMK) to reduce logging volumes by 10 percent, the impact will be quite significant," Kork said.

At Peetri Puit, a timber frame manufacturer based in Põlva County, the view is that producers cannot count on cheap domestic raw material and that it's important to manage business risks. CEO Peeter Peedomaa noted that log prices can also be affected by seasonal conditions, such as how well winter weather allows timber to be harvested.

"Price adjustments generally happen quarterly. It's hard to predict in early January what the future will bring, but I tend to think we'll see a certain rise in raw timber prices," Peedomaa said.

As a result, sawmills are planning to make up the shortfall caused by the reduction in state forest logging by sourcing logs from both southern and northern neighbors.

"We're located near the Latvian border, so we're looking to increase our purchases from the south," said Kork. "We've also heard that saw logs will begin entering Estonia from other Scandinavian countries, like Finland and Sweden, but that comes with a very high price tag, which certainly won't help our competitiveness," he added.

Source: news.err.ee