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In 2025, SFE “Forests of Ukraine” plans to build and reconstruct over 200 kilometers of forest roads. Construction work on the first scheduled sections has already been completed. Tender procedures for some of the designed road sections are also ongoing via Prozorro.
It is worth noting that the implementation of forestry activities, as well as forest protection and preservation measures, critically depends on access to forest areas and the development of forest road infrastructure. Accordingly, the routes of future forest roads are determined based on the scope of planned forestry activities, as well as ecological, economic, and social considerations.
Recently, the National Agency on Corruption Prevention (NACP) announced its intention to initiate the development of a regulatory act that would “regulate the mechanism for selecting sites for forest road construction”. However, even at present, the process of forest road construction goes through a complicated procedure.
According to Resolution No. 724 of the Cabinet of Ministers of Ukraine (as amended on October 25, 2024), the location of forest road sections is determined based on forest management materials, which themselves undergo a lengthy process of design, approval, and confirmation by the Ministry of Environmental Protection and Natural Resources of Ukraine. If necessary, changes and clarifications to the forest management materials are made through their updating process.
Each year, the regional offices of SFE “Forests of Ukraine” submit proposals to the enterprise’s investment plan, justifying the need to include specific road sections in the construction schedule.
Key criteria for deciding on the construction of a forest road:
Ability to respond quickly to forest fires: fire-fighting equipment will be able to reach remote forest areas much faster.
Improved logistics to logging sites: the skidding distance to hard-surfaced roads is minimized, reducing the cost of timber harvesting and transportation.
Reduced load on local roads: minimizing the movement of heavy machinery on public roads.
Easier access to timber for consumers: by establishing intermediate storage sites for harvested timber.
The next stage after the approval of the investment plan is the design phase, which is carried out in accordance with current construction regulations.
Depending on the planned load, predominantly two types of forest roads are designed – of the first type, arterial, with a carriageway width of 4.5 meters, and of the second type, with a carriageway width of 3.5 meters. The pavement structure is determined during the design phase, with maximum use of local materials taken into account to reduce construction costs. Sometimes it is appropriate to use a soil subgrade stabilization technique by adding mineral binders—cement or lime.
So the whole process is standardized and clearly regulated. The location, technology, materials – everything is determined by the relevant documentation and expert opinions, not by the foresters’ wishes.
We cannot fail to comment on the NACP’s statement that officials of one of the enterprise’s branches “unjustifiably planned, in 2023, the construction of a forest motor road, even though part of that road had already been built in previous years.” This concerns Dovzhanske Forestry in the Zakarpattia region. The road here was first started in 2015, but under the former forestry enterprise only partial cutting of the roadbed was completed. The forest road’s route had not even been fully cut out and cleared. When the project was adjusted in 2023, the expenses incurred for the work performed were not included in the estimate documentation. A tender was held, and a contractor was selected. Therefore, the essence of the controlling authority’s claims remains unclear.
The density of forest roads in Ukraine is many times lower than in European countries. That is why the development of forest infrastructure is one of SFE “Forests of Ukraine” key investment priorities and is one of the essential prerequisites for the sustainable development of the forestry sector. This is, in particular, provided for by the Law of Ukraine “On the Prohibition of Clear-Cutting in Mountain Fir-Beech Forests of the Carpathian Region” and by the State Forest Management Strategy of Ukraine until 2035, approved by Order No. 1777-r of the Cabinet of Ministers of Ukraine dated 29 December 2021.
Thirty percent of the planned harvest volume was offered at the forward semi-annual auctions. Following proposals from the business community, the algorithm for setting starting prices was revised, resulting in a significant reduction.
However, dialogue with the market remains ongoing. During a meeting with representatives of the European Business Association, key concerns currently facing major producers were discussed.
1.Amending the Law on Environmental Impact Assessment (EIA)
Due to restrictions that do not exist in the EU, Ukraine’s industry loses millions of cubic meters of fuelwood annually. The export of board-based products is artificially limited. One of the main reasons is the lengthy and overly bureaucratic procedure for forest restoration after natural disasters, fires, and other emergencies. Representatives of the European Business Association expressed interest in exploring the EIA issue in greater depth and taking part in the legislative amendment process.
2.Strengthening accountability of market participants
There are cases where winning bidders fail to take up the contracted volume, while other businesses suffer from a lack of available resources. Representatives of the Association pointed out such instances, noting that the current amount of the guarantee deposit is not a sufficient safeguard against bad-faith behavior by certain auction participants.
We are open to consider the Association’s proposals. Strengthening safeguards is appropriate, provided it does not lead to reduced competition, restricted access to resources, or a deterioration in business conditions.
3.Reducing deliveries from upper storage sites
In 2024, upper storage sites at SFE “Forests of Ukraine” accounted for 16% of timber shipments. In Q1 2025, this share dropped to only 4%. Our position fully aligns with that of EBA representatives — deliveries from upper storage sites should be phased out.
The only issue is the capacity of the existing infrastructure. All new forest roads built by SFE “Forests of Ukraine” are designed to include intermediate storage sites.
4.Reducing the density of the auction schedule
In recent months, timber auctions have become highly competitive. Participants competing for resources in multiple regions have suggested making the auction schedule less dense, so they can physically keep track of all the relevant lots.
We are ready to discuss this proposal together with representatives of the exchanges. SFE “Forests of Ukraine” will support any initiatives that enhance competition and market transparency and contribute to creating more convenient conditions for businesses.
5.Improving the effectiveness of claims handling
Timber is a perishable commodity. SFE “Forests of Ukraine” signs contracts for the supply of products that are still planned for harvesting. Therefore, questions related to the quality of timber may arise in one way or another. EBA representatives understand this, but note that during periods of rising prices, the issue becomes more sensitive.
To respond more promptly to buyer inquiries and resolve disputes, SFE “Forests of Ukraine” will introduce a dedicated position for a claims handling specialist.
The auctions for timber with six-month forward contracts for the second half of 2025 have been completed.
Compared to last year’s “pilot” six-month auctions, a significantly larger volume of timber resources was offered this time, including nearly all types of roundwood.
Out of the proposed 1.56 million m³ of timber (compared to 416 thousand m³ offered for the first half of 2025), a total of 1.45 million m³ was sold. Bidders contracted 93% of the available volume: 96% of roundwood and 91% of industrial fuelwood.
As a result of meetings with the business community, SFE “Forests of Ukraine” introduced a new algorithm for setting starting prices (both for semi-annual and quarterly auctions).
Therefore, starting prices at the semi-annual auctions were, in most cases, significantly below market level. However, as previously noted, this did not affect the auction outcomes. The final price, as always, was determined solely by the balance of supply and demand.
In the alder and birch segment, starting prices were twice as low as the current market level, but during the auctions they increased by 107–133%, reaching nearly UAH 8,000 per m³.
For round pine, with the current May market price at UAH 4,100 per m³, auctions started at UAH 3,600 per m³. In the course of bidding, prices returned to the market level — UAH 4,100 per m³.
Coniferous industrial fuelwood (pine) — with the current market price at UAH 1,370 per m³, bidding started at UAH 1,170 per m³ and ultimately rose to UAH 1,540 per m³.
In parallel with the semi-annual auctions, quarterly timber auctions (for Q3 2025) were also launched. These are still ongoing, and results will be reported separately.
Summary:
1.Strong business interest in six-month contracts confirms that SFE “Forests of Ukraine” is moving in the right direction. Starting next year, we will introduce annual contracts for the first time, enabling market participants to secure the necessary volumes of timber and plan their production processes with greater certainty.
2.Regardless of how much you experiment with starting prices, the situation in each individual segment is defined by current market conditions. When there is demand, prices during the auctions can double or even triple.
3.Artificially lowering the starting price leads to the opposite effect — it creates a rush of demand that drives prices up.
4.Demand for timber remains high, which makes SFE “Forests of Ukraine” proposals to amend the legal and regulatory framework that restricts timber harvesting even more relevant.
Since March, SFE “Forests of Ukraine” has had a renewed procurement team. It is led by Mykhailo Stayetskyi, who joined the enterprise from “Ukrposhta”, where one of the most successful procurement functions among large state-owned companies was built.
The goal of the new team is to enhance the efficiency and transparency of procurement at SFE “Forests of Ukraine”, optimize company expenditures, and ensure the implementation of the investment program and key initiatives.
We will discuss the results at the end of the year. However, several important changes have already been initiated in the work of the Procurement Department.
1.Implementation of Category Management
Prozorro does not automatically guarantee the best offer in announced tenders. High-quality tender preparation is required, based on in-depth analysis of each product or service category. Category managers within the Procurement Department analyze and align the enterprise’s internal needs with the external market conditions under which those needs can be met. To this end, they conduct pre-tender market consultations with manufacturers, importers, official dealers, and major players in goods and services markets. They develop procurement terms that make it possible to attract a wider range of bidders, ensuring timely and high-quality fulfillment of the enterprise’s needs at an optimal price and without additional risks. To ensure open and transparent communication with suppliers, work is being carried out on the website of SFE “Forests of Ukraine”.
The updated procurement page contains essential and practical information that suppliers need to participate in tenders. It will also feature announcements of open meetings and consultations with potential participants in the most complex and non-standard procurements, where their external supplier expertise will help define the final tender conditions.
2.Analysis of Performance Indicators
The data structure within the electronic procurement system has been modified at the enterprise level, creating analytical capabilities to assess procurement performance, both centrally and at the level of each Regional Office individually. The Department focuses on cost savings, the level of competition in bidding, their success rate, and the absence of complaints or violations. A dedicated role has been introduced for internal monitoring of Regional Office procurements, providing them with practical and methodological support to improve efficiency. This will enable faster identification of weak points, the implementation of unified approaches to tender documentation development, and the application of best practices for preventing violations of public procurement legislation.
3.Internal Ranking
A framework and criteria are being developed for the internal ranking of procurement specialists in Regional Offices. This will help motivate the strongest performers and support the growth and development of those striving to catch up with the leaders. This approach proved highly effective at “Ukrposhta”, leading to the centralization of the procurement team, which consistently demonstrated excellent results year after year (ranking 2nd in the 2024 Procurer Index).
Mykhailo Stayetskyi is confident that the procurement team at SFE “Forests of Ukraine” is on track for equally strong results.
Most formerly certified branches, now restructured as forestry management units, have successfully renewed their FSC certificates. In both the Poliskyi and Podilskyi Forest Offices, 100% of the certificates have been updated.
In some regions, there is not only renewal, but also an expansion of certified forest management areas.
In forestry management units that now include previously non-certified forest plots, the certification audit process is ongoing. Successful completion of these audits will, in the near future, enable an increase in the total area of FSC-certified forests in Ukraine.
As a result of active hostilities, large areas of forest in Ukraine have been contaminated with explosive ordnance (EO), creating a serious obstacle to forest management activities and the FSC certification process. This issue is especially relevant for the Branch “Pivnichnyi Forest Office”, where work is underway in the Chernihiv and Sumy regions to identify the boundaries of forest areas contaminated with EO. The presence of such areas is one of the key factors considered when making certification decisions for forestry enterprises.
Despite these challenges, SFE “Forests of Ukraine” continues to ensure the uninterrupted supply of certified timber products. Wood-processing enterprises, particularly those focused on export, have the opportunity to purchase certified timber in most resource-rich regions of the country. This supports the export potential of the wood-processing industry and reaffirms SFE “Forests of Ukraine” commitment to the principles of sustainable forest management, even under wartime conditions.
“We are completing the spring reforestation campaign. Priority is being given to restoring areas affected by hostilities. Today, in Kyiv region, near Ivankiv, at the Fenevytske forestry unit, memorial forests were planted.
The event was held in cooperation with Svitlana Hrynchuk, Minister of Environmental Protection and Natural Resources of Ukraine, Natalka Cmoc, Ambassador of Canada to Ukraine, Olha Vasylevska-Smahliuk, Member of Parliament, and Anna Krysiuk, founder of the Greening of the Planet initiative.
The Ivankivske forestry management unit is one of those that endured occupation during the spring of 2022. All forestry units in the area were occupied; most forest compartments came under shelling, and part of the forest was burned due to missile and artillery strikes. A large number of forestry workers remained on site, supporting the Defense Forces of Ukraine, participating in demining efforts, and helping to restore infrastructure. For more than two years, work has been ongoing to clear, prepare, and return to full operational capacity.
Previously, this area was a pure pine stand, heavily contaminated with remnants of Russian munitions, it burned by 60% as a result. Today, we have planted a mixed forest of pine and oak. All seedlings have a closed root system and a survival rate of over 95%. Foresters will also enrich the site by planting viburnum.
Resilient mixed forests will help reduce the risk of large-scale wildfires in the future, as such fires often begin in dry coniferous stands.
SFE “Forests of Ukraine” continues to plant memorial forests — in honor of Ukrainian heroes who fought for our freedom and independence. Of the 45 Forests of Memory created since the beginning of our initiative, a quarter were planted this spring. As a result, this year’s spring reforestation campaign set a record for the number of memorial forests planted,” said Yurii Bolokhovets.
At the beginning of May, the next round of exchange auctions will begin for the conclusion of forward contracts for the second half of 2025.
As a reminder, SFE “Forests of Ukraine” first introduced the practice of six-month fixed-price contracts at the end of last year. At that time, for deliveries in the first half of 2025, the enterprise’s branches offered 416,000 m³ of timber, of which 351,000 m³ were sold (including 168,000 m³ of roundwood and 156,000 m³ of industrial fuelwood).
The experiment proved successful. As of the end of April, 64% of the roundwood volume and 73% of the industrial fuelwood volume had been delivered to buyers, which is fully in line with the delivery schedule.
Long-term contracts contribute to effective planning and the development of production activities, both for processing enterprises and for SFE “Forests of Ukraine.” Thus, positive result is our shared achievement and opens the door to scaling up this new practice.
As previously announced by SFE “Forests of Ukraine,” the volume of timber allocated for forward contracts with delivery in the second half of 2025 has been increased to 30% of the enterprise’s planned harvest.
In total, 1.56 million m³ of timber have been offered at the semi-annual auctions (including 624.4 thousand m³ of roundwood and 928.4 thousand m³ of fuelwood). This is nearly four times more than was offered last year.
Another important update. Based on suggestions from market participants, the method for determining starting prices for timber products has been improved.
Firstly, starting prices are now calculated based on actual transaction prices (excluding speculative purchases that did not result in actual deliveries).
Secondly, the reference period used to calculate starting prices has been extended, which helps to smooth out temporary price spikes.
Therefore, for the Q3 2025 auctions and forward contracts for the second half of 2025, starting prices are based on three indicators: actual transaction prices from Q4 2024 and Q1 2025, as well as the starting prices from Q2 2025 auctions (for identical assortments with the corresponding delivery basis).
Thus, the enterprise has created the conditions for price stabilization in the timber market; however, auction results will ultimately depend on demand. As always, prices will be determined solely by buyers.
SFE “Forests of Ukraine” remains open to dialogue with market participants regarding further improvement of the timber sales system.
Due to the full-scale war, the vehicle fleet of SFE “Forests of Ukraine” has sustained significant losses. Since the beginning of hostilities, forestry workers have transferred more than 1,000 units of equipment to support the front, including hundreds of passenger vehicles. This has further exacerbated the shortage of transport in the forestry sector.
Just a year ago, due to the transfer by SFE “Forests of Ukraine” of equipment to the front lines and the aging of the fleet (over 50% of the vehicles were outdated), there was, on average, less than one vehicle per forestry unit. Some forestry units were left without a single operational vehicle.
In 2024, SFE “Forests of Ukraine” launched a large-scale vehicle renewal program. So far this year, 250 vehicles have already been purchased, reducing the number of forestry units without transport by half. Today, on average, one vehicle covers 2,500 hectares of forest.
However, the need for vehicles remains high, especially in frontline regions, including the forestry enterprises of Kharkiv region, which recently became part of SFE “Forests of Ukraine”. To support their operations, 6 off-road vehicles equipped with firefighting equipment have already been transferred from branches of the company in other regions.
Soon, Slovianskе, Lymanske, Velykoanadolske, Oleshkivske, and Velykokopanivske forestry enterprises will also join SFE “Forests of Ukraine”. They too require modern equipment for forest protection and maintenance.
As part of its investment plan, the company intends to purchase another 179 vehicles in 2025, including:
49 all-wheel-drive pickup trucks, half of which will be equipped with firefighting modules with a 0.5 m³ capacity;
130 high-clearance utility vehicles for patrolling, combating illegal logging, responding to fires, and performing operational tasks.
Procurement is conducted via the Prozorro electronic platform. The vehicle packages will include:
a winter set of tires,
special trunk-mounted equipment,
metal engine protection,
standard road safety kits and accessories.
Last year, recreational areas managed by “Forests of Ukraine” were visited by over 3 million Ukrainians. Thousands of hectares of forest were preserved from potential wildfires thanks to the creation of comfortable, safe, and free places for public recreation.
This year, the recreational development program continues. Since 2023, the enterprise has established more than 100 modern “Lisovychok” sites. In 2025, an additional 50 will be created.
The new recreational sites are fully equipped leisure complexes with developed infrastructure (including children’s and sports playgrounds, water supply, electricity, restrooms, barbecue areas, and more). In most cases, eco-trails are also created nearby, passing through scenic natural locations.
Most of the new sites will be established in the Polissia region and the northern areas, where coniferous stands especially vulnerable to wildfires are predominant.
How do we choose locations for “Lisovychok” sites?
1.Intercepting tourist flows
Recreational sites are placed in areas with the highest concentration of visitors, most often near highways and populated areas. For example, this year a new site was opened along the H-31 highway (Dnipro–Reshetylivka), near the village of Obukhivka. During the Easter holidays, it was completely full.
2.Preventing illegal dumping
Litter left behind after picnics posed a risk of forming an illegal dumping site in the forest along the banks of the Psel River in Sumy. To stop this, a new recreational site is being built there.
3.Ensuring visitor safety from landmine hazards
In Kyiv, Chernihiv, Sumy, Kharkiv regions and others, thousands of hectares of forest are contaminated with explosive ordnance. Dangerous areas are often located near populated places and pose a serious threat to people. One of our new recreational sites is being established near Irpin, where intense fighting took place in 2022.
4.Educational and cultural activities in partnership with communities
The development of the recreational network is part of the enterprise’s cooperation with local communities. One of the districts of the city of Kamianske borders the forest areas of the Pankivske forestry management unit. The local community approached us with a proposal to establish a recreational site here, including sports grounds for football, basketball, and other activities.
During recent meetings with the business community, one of the key demands was to increase harvesting volumes due to a severe shortage of available timber resources.
However, the facts tell a different story. Since the beginning of April, the SFE “Forests of Ukraine” hotline has not received a single complaint regarding failure to fulfill timber supply contracts due to the fault of forestry enterprises (the only case involves a conflict between private businesses in the Carpathian region, where our employees became hostages to the situation). Nevertheless, the volume of uncollected timber at storage sites has increased noticeably.
Outstanding payments from businesses for already delivered products have also increased — now totaling up to UAH 500 million.
Among those failing to meet their obligations are companies ranked in the industry’s top 10.
Currently, business liability for breaching contracts is minimal. Buyers face virtually no risks. When there are significant price fluctuations on the market, it is sometimes easier for buyers to leave a contract unfulfilled and re-enter the auction instead.
SFE “Forests of Ukraine” harvests timber specifically under signed contracts. Therefore, delays caused by repeated auctions carry the risk of timber quality deterioration especially during the warmer months. The accumulation of timber products and overloading of storage facilities lead to increased warehousing costs. Delayed payments negatively affect settlements with service providers (primarily logging contractors). A forced halt disrupts the work of harvesting crews, resulting in the loss of scarce personnel who are difficult to replace.
Our company is actively working to address the issue. We are increasing the share of long-term contracts. The situation will undoubtedly stabilize. However, the issue of business responsibility must be taken into account in future discussions on increasing harvesting volumes. If we demand — we must also be accountable.