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Profitability of forestry high in 2017

Natural Resources Institute Finland -

The positive trend in forest industries was also reflected in the profitability of non-industrial private forestry in 2017. The operating profit of non-industrial private forests increased to EUR 126 per hectare, being nearly 17% above the average of the preceding ten-year period. The return on investment in wood production increased to more than 6%.

The operating profit of non-industrial private forestry increased to EUR 126 per hectare as a result of increased felling in non-industrial private forests, improved prices of standing sales and fewer investments. The total profit was EUR 1,682 million, showing an increase of 7% from the previous year, when prices were converted using the cost of living index. This was 17% higher than the average of the preceding ten-year period, while being lower than in the 2007 peak year.

Photo: Erkki Oksanen Operating profit over three times higher in southern Finland than in northern Finland

In southern Finland, the operating profit of non-industrial private forestry was EUR 165 per hectare on average. The highest profit of EUR 245 per hectare was in the Tavastia Proper region. In northern Finland in the regions of Northern Ostrobothnia, Kainuu and Lapland, the operating profit was EUR 49 per hectare on average.

In southern Finland, the operating profit increased by 6% as a result of increased profit from the sale of wood. The operating profit increased by more than 16% in northern Finland. This increase was also affected by fewer investments in wood production and higher subsidies.

“These significant changes in northern Finland can partly be explained by information about work types, subsidies and total costs being entered in statistics at different times”, says Esa Uotila, researcher at the National Resources Institute Finland (Luke).

Operating profit in non-industrial private forestry by region in 1991–2017.

According to Uotila, subsidies are entered in statistics after they have been used, while costs are only entered during the year when the project in question is completed.

The operating profit of non-industrial private forests is calculated by deducting investments in wood production and estimated administrative and other costs from stumpage earnings.

Increased stumpage prices improved return on assets in wood production

The return on investment in wood production was 6.4% in 2017. The last time an increase in stumpage prices had a clearly positive impact on profit was in 2010 as a result of corrective actions taken after the decline in 2009. In 2017, the impact of stumpage prices on the profit was 2.1 percentage points. Gains from wood sales had clearly the most impact on the return on investment, i.e. 4.0 percentage points. The value of net increment increased the profit by 0.8 percentage points and state subsidies by 0.1 percentage points. The total costs of wood production reduced the profit by 0.7 percentage points. Compared to the preceding ten-year period, the profit was 3.9 percentage points higher.

“Excluding changes in wood prices, the profit of wood production is slightly above 4%”, Uotila says.

In this calculation, changes in wood prices have an impact on the value of assets calculated on the basis of the prices of standing sales and the number of trees in forests. Variation in prices has ranged at most between +25 percentage points and -20 percentage points.

The total value of non-industrial private forests calculated on the basis of the prices of standing sales and tree volumes was EUR 45.5 billion in 2017.

Artikkeli Profitability of forestry high in 2017 julkaistiin ensimmäisen kerran Luonnonvarakeskus.

Lasten maatalousnäyttely Mansikissa 6 000 hengen yleisöennätys

Natural Resources Institute Finland -

Viime lauantaina 8.9. lasten maatalousnäyttely Mansikki keräsi mahtavan 6 000 hengen ennätysyleisön Elonkiertoon Jokioisiin.

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Artikkeli Lasten maatalousnäyttely Mansikissa 6 000 hengen yleisöennätys julkaistiin ensimmäisen kerran Luonnonvarakeskus.

500,000 tons of the total 2017 cereal harvest exported

Natural Resources Institute Finland -

The autumn 2017 cereal harvest totalled 3.4 million tons. From last summer to this summer, 3.0 million tons of this amount were used in Finland. Exports mainly consisted of oats. Cereal stocks decreased slightly.

The majority of Finland’s cereal harvest, or approximately 2.0 million tons, was used to produce feed for domestic animals.

“A little over 400,000 tons passed through the food processing industry. The malt and other cereal industry used more than 300,000 tons”, says Anneli Partala, senior statistician at the Natural Resources Institute Finland (Luke).

Some 250,000 tons were used for next year’s sowing. Exports totalled 500,000 tons.

Rye. (Photo: Tapio Tuomela) Mainly oats were exported

In the 2017–2018 crop year, more than 330,000 tons of oats were exported. In addition, exports included more than 90,000 tons of wheat and over 80,000 tons of barley.

Unusually, no rye was imported, since the 2017 rye harvest was the highest during the 2000s and covered domestic demand.

An exceptional cereal year expected

The last time the cereal harvest was below the level of domestic consumption was in the 2010–2011 crop year. Then, Finnish stocks contained more than 2.0 million tons of cereals thanks to high production years 2007–2009. Cereal stocks also had room for exports.

“According to the most recent harvest estimate, the cereal harvest of autumn 2018 will be 2.7 million tons. This is not sufficient to cover regular domestic consumption, that is, roughly 3.0 million tons”, Partala says.

On average, current cereal stocks in industry and trade are at the level of 450,000 tons. Stock levels on farms are not believed to be very high, as this was the fourth autumn in succession when the cereal harvest decreased.

Background to the statistics

Luke’s Statistical Services monitors the production, use, consumption and stocks of domestic cereals on the basis of available statistical data. The cereal balance sheet and statistics of the use of harvests on farms are prepared every crop year. The most recent statistics are estimates prepared for the crop year from 1 July 2017 to 30 June 2018. The statistics are available on stat.luke.fi/en. The Finnish Cereal Committee also monitors the status of each crop year on a quarterly basis at its website.

Artikkeli 500,000 tons of the total 2017 cereal harvest exported julkaistiin ensimmäisen kerran Luonnonvarakeskus.

Scientists adding twist of bioeconomy to arctic policies

Natural Resources Institute Finland -

Climate change has turned the EU to look closely at the Arctic areas. According to Luke scientists, the decision makers should dig deeper in the possibilities of sustainable Arctic bioeconomy.

One-third of Finland’s area lies north of the Polar Circle, the geographical definition of the Arctic. The county of Lapland covers more than 100 000 square kilometres of sparsely populated land.

Tourism is included in the bioeconomy, as it is also based on the extreme natural conditions. Researchers have clarified how vulnerable nature can be used at different times of the year. The aim is to promote sustainable tourism and to maintain traditional land use. Photo: Plugi Sustainability in the Arctic

When Research Professor Sirpa Kurppa from Luke talks about the Arctic bioeconomy, she talks about livelihoods and future in Lapland, but adds a wider perspective. Kurppa describes her view as a set of know-how and possibilities, in local and global scale.
“We should make use of the Arctic know-how in the whole Finland. Icebreakers and other systems functioning in cold conditions can be developed and manufactured in the whole country”, Kurppa points out.

To promote research-based knowledge about the Arctic, Kurppa and her research group published a policy brief for decision makers. Kurppa has an established career in agroecology and the focus of the Arctic bioeconomy brief is in the sustainable use of the northern nature.

The time for the research-based brief is suitable, as Finland is holding the chair of the Arctic Council until 2019.

“Finland took the chair in 2017 and since then, the focus has been on the technological issues concerning the Arctic seaway and oil and gas resources. That is why we should bring up the special natural circumstances and how to use them in a sustainable way in the future bio-economy”, Kurppa says.

Tourism belongs to bioeconomy

Recently, Lapland and other Arctic areas have experienced a vast growth of tourism. According to the researchers, the future of tourism is now closely watched in all the countries of the Arctic region.

“Tourists are attracted here by the well-functioning society, the services, nature and a secure environment, even the darkness. These we should cherish”, Kurppa says.

Therefore, tourism is included in the bioeconomy, as it is also based on the extreme natural conditions. Researchers have clarified how vulnerable nature can be used at different times of the year. The aim is to promote sustainable tourism and to maintain traditional land use.

“Tourism grows fast and Finns should now consider how to manage it in our own hands. There is a great danger that tourism will move into the hands of the global players. With mass tourism, the northern uniqueness can be ruined in an instant”, Kurppa warns.

Arctic food goes global?

As tourists are attracted by the Arctic Lapland, Lapland should seek its own way to the global market, scientists say. One of the aims of the policy brief is to export more Finnish products.

“Finland is the northernmost country where farming is practised in a large scale. Many companies already use Arctic in their brands and marketing. Our strengths are cleanliness, food safety and production where only small amounts of antibiotics are used. However, these same arguments are used by other countries”, says Researcher Jaana Kotro of Luke.

To access the global market with the Arctic brand, Luke scientists suggest cooperation of the whole Barents region, go-ahead innovations and, most importantly, knowledge about customers’ needs.

For this path, Luke scientists offer their practical help for decision makers as well as entrepreneurs in their out-reaching bioeconomy projects. Kotro’s project “Arctic Food in Finland” is well on the way and offers free, research based material that companies can use in their marketing efforts.

Text: Marjatta sihvonen

Reindeer entrepreneur Riikka Kenttälä: Future is for those who adapt

Riikka Kenttälä, 27, is taking over her family business in Levi, Lapland. I love to work with people and reindeer, says the young entrepreneur, who combines traditional reindeer husbandry with tourism.

Tourists come to Kenttälä’s home farm, Sammuntupa, from all over the world. Photo: Kirsti Hassinen

Riikka Kenttälä’s winters pass with tourists. Together with her brother and parents, she takes both Finnish and international customers to trips with reindeer sledges.
“We also tell our guests about reindeer herding. In the future, I would like to take them reindeer round-ups, so they see what real life and work is like here”, Kenttälä says.

Tourists come to Kenttälä’s home farm, Sammuntupa, from all over the world. Regular visitors come from Central and Eastern Europe and Russia, growing numbers from Canada and USA, even from Australia and Singapore.

Sustainability questions are familiar to Riikka Kenttälä, especially in terms of space. In Levi area, the number of cottages and other free time facilities grows fast. Photo: Riikka Kenttälä

Kenttälä says she has not made any big marketing efforts, as the pressure of growing tourism is so strong.
“We have our facebook site and internet pages and a network of travel agencies in Finland, Switzerland and France. Many visitors love our old farm milieu and us just being ourselves. That is what our marketing mainly is.”

Sustainability questions are familiar to Kenttälä, especially in terms of space. In Levi area, the number of cottages and other free time facilities grows fast.
“All people do not like reindeer roaming free. I kind of understand that. We try to arrange our work so that the environment is not used excessively. But there is also Kittilä mine here, cottage owners, skiers, hikers. We all need space.”

In the future, Kenttälä is planning to sell her own reindeer meat at the farm.
“I have never thought about selling meat to Asia, because the demand is local. The problem is, there is no governmental financing instrument that would allow me to build premises for cutting meat.”

The biggest obstacle to Arctic entrepreneurs is how to get educated, skilful staff.
“We have had to take workers without any training in travel business and train them ourselves.”

It is autumn in Lapland and Kenttälä prepares for the busiest season of the year, Christmas. She hopes scientists and decision makers could help to solve the problem of summer season, as there would also be lots to see but less demand. However, the future looks good now.
“The demand for travel services has been so strong that it forces our business to grow and develop”, Kenttälä says.

Artikkeli Scientists adding twist of bioeconomy to arctic policies julkaistiin ensimmäisen kerran Luonnonvarakeskus.

Total costs of silviculture and forest improvement were EUR 234 million in 2017

Natural Resources Institute Finland -

According to statistics of the Natural Resources Institute Finland (Luke), total costs of silviculture were EUR 211 million in 2017. The amount is slightly higher than in the previous year. Of all work types, pre-commercial thinnings generated the highest costs, i.e. EUR 58 million. The costs of improvement of young stands were EUR 19 million, while EUR 48 million were invested in artificial regeneration and EUR 35 million in soil preparation.

Investments in forest improvement nearly halved from the previous year.

“In total, costs of construction and basic improvement of forest roads and ditch network maintenance totalled EUR 23 million. This decline resulted from decreases in basic improvement of forest roads. The allocation of multi-year projects regarding forest road maintenance determines the year in which each specific road is recorded in statistics”, says Aarre Peltola, senior statistician at Luke.

Photo: Erkki Oksanen. Felling area totalled 688,000 hectares

On the basis of notifications of forest use, the area treated with fellings was estimated to be 688,000 hectares. Intermediate fellings accounted for 73% of this area. The regeneration felling area was 176,000 hectares. Of this, clearcutting made up 144,000 hectares. With regard to forest regeneration, clearcutting was clearly more common than natural regeneration.

Soil preparation and pre-commercial thinning areas close to the year before

In 2017, the artificial regeneration area decreased by 5% from the previous year to 103,000 hectares. Of this, roughly three quarters were planted and one quarter was seeded. Of the area planted (79,000 hectares), 67% were regenerated for spruce and 28% for pine. Birch accounted for 5% of this area. Forest planting nearly always took place manually. Seeded areas are usually regenerated for pine, and this is mostly done mechanically.

The growing conditions of naturally and artificially regenerated seedling stands can be improved by means of soil preparation.

“In 2017, the soil preparation area was 105,000 hectares, being slightly larger than in the previous year. The most common method was mounding which accounted for two-thirds of the soil preparation area”, Peltola says.

Early and later pre-commercial thinning and improvement of young stands take care of the ability of forests to produce valuable large-sized trees. The total area of early and later pre-commercial thinnings of 146,000 hectares was close to the previous year. It is still carried out by forest workers, as mechanical methods remained under 1%. The area of improvement of young stands totalled 43,000 hectares, showing a decrease of 8% from the year before.

Luke’s statistics of silviculture and forest improvement include work carried out in non-industrial private, forest industries and state owned forests. The statistics do not include work carried out independently by non-industrial private forest owners in their own forests, as it is not recorded in the statistical data collected from forest service providers.

Artikkeli Total costs of silviculture and forest improvement were EUR 234 million in 2017 julkaistiin ensimmäisen kerran Luonnonvarakeskus.

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