Next week, the main timber auctions with delivery in the fourth quarter will conclude. The volume of resources put up for auction by SFE “Forests of Ukraine,” compared to last year, has practically not changed (taking into account the products sold earlier in summer at six-month forward auctions). Starting prices at the auctions were lower than actual sales prices; nevertheless, demand once again pushed prices upward. A detailed analysis will be published later, but preliminary data shows that prices have risen on average by more than 50%.

This situation, of course, raises concerns among businesses.

SFE “Forests of Ukraine” is equally interested in maintaining the stable operation of the woodworking industry and ensuring a balance between supply and demand. Therefore, we are always open to dialogue with businesses.

Following the latest sectoral meeting organized by the Federation of Trade Unions together with a group of MPs, a number of proposals were voiced on social media. And although most of these issues are not directly within the competence of SFE “Forests of Ukraine” but rather of commodity exchanges or government authorities, we join in their public discussion.

1.Cancellation of the single clearing account for guarantee deposits

Traditionally, auction participants would select the lots they intended to bid on before the start of trading and, accordingly, made guarantee deposits. In 2025, following business proposals, commodity exchanges introduced a single clearing account. This allowed participants not to tie up large amounts of working capital (limited only to the lots for which bids were submitted), enabled competition for a greater number of lots, and strengthened competition overall. On the other hand, risks of unscrupulous actions appeared. The issue of introducing or canceling the single account is not within SFE “Forests of Ukraine’s” competence; however, our position is that timber auctions should not become a platform for speculation and unfair competition.

2.Introduction of a tiered system for guarantee deposits

Our position is that the market must operate under uniform rules for all—small, medium, and large businesses. These rules should not limit competition in some segments while intensifying it in others.

3.Introduction of an effective mechanism for bank guarantees

Auction participants pay guarantee deposits not to the account of SFE “Forests of Ukraine”; until contracts are signed, the funds remain in the account of the Unified Clearing Depository (UCD). But we support innovations that reduce the burden on businesses while preserving control tools and ensuring responsibility.

4.Strengthening the penalty system for unscrupulous participants

This issue has been discussed for a long time. We believe that businesses and auction organizers must find a balanced solution that does not harm companies affected by war-related challenges (such as mobilization of workers) but at the same time increases accountability for dishonest participants.

5.Transparency and publicity of auction participants

SFE “Forests of Ukraine” procures goods and services via the Prozorro platform, so our contracts and contractors are public. We also support transparency in timber sales, but this requires an appropriate regulatory framework.

6.A more tailored and responsible approach to lot formation

SFE “Forests of Ukraine” forms lots according to recommendations from the State Forest Agency, which are the result of consultations with businesses. Lot formation reflects the business landscape of the region—for example, in Zakarpattia, where small businesses dominate, 90% of lots are formed with a volume not exceeding 100 m³. On a monthly delivery basis, this volume averages about 30 m³. SFE “Forests of Ukraine” is open to dialogue with businesses regarding changes in lot formation if there are objective reasons for it.

7.Publication of the starting price formation methodology

We will not comment for other forest users, but the methodology of SFE “Forests of Ukraine,” developed in consultation with businesses, has been repeatedly made public. Prices for quarterly auction trades and semiannual forward contracts are based on the actual selling prices of the previous two quarters (for which deliveries took place) and the starting prices of the current quarter’s auctions. At the fourth-quarter auctions, starting prices were significantly lower than current selling prices. SFE “Forests of Ukraine” is open to receiving and considering proposals regarding the formation of starting prices.

8.Accountability of regional managers of SFE “Forests of Ukraine” for ensuring declared timber volumes on the market

The effectiveness of a regional manager’s work is primarily reflected in the percentage of contract fulfillment. Currently, for forward contracts, this exceeds 100% (ahead of schedule), and for third-quarter contracts, by the end of the month, it will exceed 90% (not 100% because some buyers refuse or fail to pay on time, losing their right to the goods). Thus, regional branches faithfully harvest and deliver the contracted volumes. As for harvesting in general, permits are required to conduct it. This procedure, as is well known, depends on many factors, and the efficiency of a regional manager is only one of them—and often not the decisive one.