Long-term contracts, a new methodology for setting starting prices, and an increased felling fund: SFE “Forests of Ukraine” delivers on its promises and is ready to continue dialogue with the market

At the State Forest Resources Agency of Ukraine, another quarterly meeting was held between representatives of the agency and SFE “Forests of Ukraine” and representatives of the wood-processing industry and environmental organizations.

Topic: “Opportunities to increase timber harvesting volumes while adhering to all necessary environmental standards”.

The roadmap for addressing this issue was approved by the parties back in March at the SFE “Forests of Ukraine” forum in Zhytomyr. SFE “Forests of Ukraine” has consistently fulfilled its commitments to the market.

– The share of resources allocated to semiannual forward contracts has been increased to 30% (1.56 million m³ for the second half).

– Starting auction prices are now set based on actual sale prices (the “speculative” purchases for which no deliveries were made have been excluded). The period used to calculate starting prices has been extended (temporary price spikes are leveled out).

– Work on approving forest inventory materials has been significantly accelerated (almost 400,000 m³ has already been added to the harvesting fund, with a further 1 million m³ expected by year’s end).

– A transparent and competitive market for harvesting services is being established — contracts for 3.4 million m³ of timber have already been concluded through open auctions. If a contractor fails to fulfill its obligations, the enterprise reinforces its own harvesting crews by bringing the contractor’s employees onto its payroll.

The State Forest Resources Agency of Ukraine has done substantial work in refining the regulatory framework. A new regulatory act is now being prepared for Cabinet of Ministers approval, which will allow SFE “Forests of Ukraine” to add at least another 0.5 million m³ of timber to its harvesting operations in the future.

However, much work remains to be done to amend the legislation. Support from the business community for this process is very important.

As a result of the meeting, it was agreed to collaborate in the following areas:

– Strengthen work and coordinate efforts to address legislative regulation of the approach to conducting preparatory works for the special use of forest resources; deregulation in the forestry sector, particularly concerning the procedure for approving forest inventory materials and simplifying the procedure for conducting forestry activities on lands of the Nature Reserve Fund.

– Harmonization of current legislation with the provisions of Directive 2011/92/EU of the European Parliament and of the Council of 13 December 2011, and reforming the approach to conducting environmental impact assessments in the forestry sector.

– Methodological preparation for the transition to transformation felling aimed at conducting forestry according to close-to-nature principles, including with respect to forest inventory materials, as well as training specialized professionals.

– Expanding the practice of quarterly meetings with representatives of the wood-processing industry and environmental organizations.