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“Instead of producing value-added products from state wood, caring for the regions, developing industry and employment, we are the last country in Europe that only sells raw materials to any buyer who has offered a higher price”, Raimundas Beinortas, holder of Lietuvos mediena.
Lithuanian wood – for Latvians
According to R. Beinort, in the auction held in the Electronic Wood Sales System (EMPS) at the end of May to conclude semi-annual contracts in 2021, 90 companies competed for the opportunity to buy logs for wood production.
“During the auction, a little more than 100,000. cubic meters of this raw material, but most of it will not reach Lithuanian companies. Almost 75 percent. the quantity found in the auction will be exported to Latvia, practically to a company ”, explains R. Beinortas.
Arvydas Urbis, Chairman of the Board of the West Lithuanian Wood Processors and Exporters Association (VLMPEA), says that the increasing export of wood raw material is “a consequence of a disease that has not been treated for many years.”
“In Lithuania, companies from other countries can freely buy state wood at auctions. Meanwhile, the Lithuanian timber industry can only source raw materials in Lithuania; it is practically impossible for us to buy them from Latvians or Poles ”, assures A. Urbis.
It also has the support of Andrius Zimnickas, director of the Wood Processors Association.
“While in Lithuania, it is completely impossible to buy state wood from Latvia. There is hardly a person in Lithuania who can name the price of the Latvian state forest, ”he says.
Interlocutors claim that these cases are not isolated in auctions: Lithuanian wood is exported to Latvia, Poland or other countries, and local producers do not have the opportunity to buy state-owned raw materials grown in Lithuania.
Distorts prices in Lithuania
According to R. Beinort, a big problem is that companies from neighboring countries, by participating in Lithuanian wood auctions, drive prices.
“For example, in Latvia itself, a local company may have already purchased 90% of the amount of wood it needs at attractive local prices. Such a company can already secure the missing quantity at the Lithuanian auction by offering much higher prices. high, as this will not cause a significant change in the general cost structure ”, explains the director of the Lietuvos Mediena association.
According to A. Zimnickas, such a price struggle cannot even be considered competitive.
“These are intervention prices that then respond to the Lithuanian wood processing companies with long-term contracts. If this continues, there will be no competition or the wood industry in Lithuania, ”says A. Zimnickas.
VLMPEA representative A. Urbis states that Lithuanian companies will not be able to compete with intervention prices.
“The markets in which we compete for products are the same. However, our companies are not only starting to lose wood, they are even becoming uncompetitive. These intervention prices from neighbors are an economic war with Lithuania within the EU ”, says A. Urbis.
Production and investment stack
The company “Šilalės mediena” uses logs for the production of construction timber. In the May auction, the company expressed the need to acquire more than 72 thousand. cubic meters of this raw material, but it only ensured a quarter of the demand.
“The Šilalės medienė sawmill is down, it doesn’t work. The company has time for a week of wood cutting; logging begins to stop, hesitating in the face of new commercial commitments. And there is no talk of any new construction or modernization ”, says A. Urbis.
A. Zimnickas, director of the Association of Wood Processors, says that without raw materials and other companies will be forced to reduce production volumes or shifts, to solve the problems of long-term contracts.
“There is no country in Europe that does not supply raw materials to its local industry in one way or another. In the wood industry, modernization is very expensive, so companies that do not receive raw materials and do not sell their products will not have the funds to reinvest ”, explains A. Zimnickas.
According to him, if that auction trend continues, the wood industry in Lithuania will not develop fast enough, there will be no competition, companies will move or be bought by competitors from neighboring countries.
A. Urbis also agrees with him, saying that the situation is getting really critical.
“Another auction of this type and we will be able to hang the keys on the door and close the companies. Several companies are already seriously considering moving to the Czech Republic or Hungary, ”says A. Urbis.
Threats to the renewal and objectives of the EU Green Course
R. Beinortas, director of the association “Lietuvos mediena”, affirms that the wood processed in the local market generates more economic benefits for the country than the exported one.
“It is estimated that a cubic meter of wood processed in Lithuania in the form of various taxes generates a profit for the state of about 70 euros. Meanwhile, wood exporting companies often even recoup VAT, ”says Beinort.
Another important aspect, he said, is the Green Rate announced by the European Commission and the goal of at least 50% of construction. raw materials would be organic.
“How will Lithuania achieve this goal if a large part of the sawn logs suitable for construction is exported from Lithuania? This situation also intersects with the ambitious goals of the government for 2024. Increase the scale of rehabilitation to 1,000 houses per year. These targets lose their meaning if export volumes of wood raw materials continue to grow ”, says the director of the Lithuanian Wood Association.
A. Urbis also draws attention to the challenges of building wooden houses.
“If this continues, then the construction of our wooden houses will be torn down on the roads, hardly anyone will take over. There will be no sawmills, we will transport blanks and we will pay the money not to our own state, but to others,” says A Urbis.
Caught in a provision of the law
According to R. Beinort, the State Forest Law stipulates that the State must receive the greatest economic and social benefits from the sale of wood, but so far no criteria have been defined to achieve this objective when evaluating buyers .
“Last year, the amendments to the law were included in the program of the spring session of the Seimas, all the deliberations in the committees were approved with success and only in the stage of adoption in the plenary session, two votes were missing, they were returned to the Government for its improvement. So far it is there ”, says R. Beinort.
“So far we have no results, only the process. However, for us as producers, the most important result is ”, says A. Urbis, Chairman of the Board of VLMPEA.
A. Zimnickas also agrees that a clear policy that provides economic and social benefits in the field of state forestry is lacking.
“There is a basic lack of clarity, saying: in the end, the wood industry in Lithuania is necessary or not. It is difficult to live on promises and hopes all the time. If the industry is not necessary, provide the opportunity to move to other countries. Give it specificity and we will adapt, ”says A. Zimnickas.
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