Ukraine is scaling up timber production, building new forest roads and stamping out corruption, with the government looking to stimulate processors desperately trying to avoid bankruptcy.
That is according to Yuriy Bolokhovets, the director-general of Forests of Ukraine, who announced yesterday the sale of up to 1 million cubic metres of timber via Dutch auction later this month.
“Uncertainty with borders plus the holiday period in the EU countries have reduced the demand for wood. Many processors have taken a break… Demand is gradually recovering; however, in some market segments, the situation remains difficult,” according to Mr Bolokhovets.
Further complicating the recovery is the ongoing border blockade, which has resulted in more than 50% of processors leaving the market and blocking Ukrainian access to Asian markets. Ukraine estimates that the embargo already cost the the economy 1 billion hryvnia (or US $25 million) in forest exports in December alone.
“If it were not for the timely reform,” Mr Bolokhovets said, “dozens of forestry enterprises would have been on the verge of bankruptcy already in January.”
“Thanks to subsidies from the central level, all our branch employees receive salaries on time. All branches have working capital to carry out their activities; no one has stopped.”
Amid a challenging timber market, Mr Bolokhovets said President Zelensky’s government would continue to reduce costs, increase efficiency and stamp out corruption.
“This means a mandatory assessment and justification of investments, the most open and competitive procurement, and efficient use of the equipment and other resources.”
It includes demining activities, with Wood Central reporting in October that Ukraine is partnering with the United States and EU to remove tens of landmines from forests, fields and roads every month.
At least 3.5 million hectares of forest have been affected by military activities in Ukraine and Crimea, with at least 1 million hectares of areas designated for sustainable forest management impacted by heavy disturbance in aboveground ecosystems, soils and water systems significantly impacting forest health.
Ukraine can potentially be a global power for forest products – with Ukraine working towards a 3 billion tree target and investing in improving timber processing as part of Zelensky’s “Green Country” agenda.
“This means a mandatory assessment and justification of investments, the most open and competitive procurement, efficient use of equipment and other resources,” Mr Bolokhovets said.
To achieve this, Ukraine is offloading unprofitable assets and optimising the government’s administrative apparatus to reduce “the cost of constructing new forest roads,” an enormous challenge to the substantial damages caused by the ongoing conflict.
- For more information about Ukraine and its forest industry challenges, click on Wood Central’s special feature.
