The production plan of Croatian Forests, or the amount of raw material that may be logged this year, amounts to 2.26 million cubic meters, while buyers have so far expressed demands for 2.89 million cubic meters, the Ministry of Agriculture announced on Wednesday, emphasizing that supervision of companies in the timber sector is ongoing to curb abuses.
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According to a statement published on the Ministry’s website, the production plan of Croatian Forests for 2017, or the amount of raw material that may be logged this year intended for processing in the wood industry, amounts to 2,261,824 cubic meters, while the demands expressed by existing and new customers so far exceed 2.89 million cubic meters.
Former Management Tolerated Deviations
“Namely, the former Management of Forests tolerated deviations in the reported classes of finalization for a certain number of customers in the past period, and some customers were not delivered the contracted quantities, so the carried-over debt from 2016 based on concluded contracts and undelivered quantities today amounts to 119,129 cubic meters. Furthermore, existing customers are requesting additional quantities of 321,042 cubic meters, while new customers are requesting another 206,544 cubic meters,” the Ministry states.
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They emphasize that, given all these demands, the demand from wood processors for logs in 2017 is higher by as much as 636,604 cubic meters compared to the amount that may be logged this year based on the forestry management basis.
“Therefore, it is necessary to reduce the quantities under individual contracts, while strictly respecting the classes of product completion and the actual needs of customers,” the Ministry of Agriculture states.
They explain that the low price of wood assortments in Croatia compared to prices in European countries is the main reason for the increasing demand and that “wood raw material, depending on the type, is undervalued by 30 to even 70 percent.”
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“As a result, high-quality wood raw material from Croatian forests – especially oak – has been in focus for both domestic and foreign companies for years, leading to rapid development and becoming the dominant primary processing. Numerous sawmills have been established that potentially process raw material and create semi-finished products – boards or even less, exporting logs and achieving quick and significant profits with little risk,” the Ministry of Agriculture warns.
Target of Foreign Capital
Such practices, they further state, directly affect and harm many Croatian companies that have developed final production but lack raw materials.
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The Ministry warns that due to the low price of logs, as well as cheap labor, Croatian wood processors have become targets for foreign capital. “Many foreign companies are specifically coming to Croatia and taking over local companies because, through this model, they gain access to cheap yet high-quality raw materials. However, it is also a fact that some domestic wood processors do not process the raw materials they received at preferential prices into high-income products but resell logs/boards for export at significantly higher prices,” the statement notes.
Curbing Abuses
The Ministry states that supervision of companies in the timber sector is ongoing, and “the intention is to curb abuses and implement a restructuring of the sales model of wood assortments while respecting all specific conditions from the defined classes of product completion and the actual needs of customers.”
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“The goal is for finalists to receive the maximum necessary quantities, and for the planned annual logging not to increase. Finalists found to have resold raw materials will be left without them, while companies that do not have sufficient quantities will receive them,” the Ministry emphasizes.
They support the previous inappropriate use of raw materials with data on exports in the first ten months of last year – exports of logs and wood products amounted to 530 million euros, while furniture exports brought only 257 million euros.
