Päiviö Riihinen

Roundwood market: A source of stagnation of the forest industries

Riihinen P. (1982). Roundwood market: A source of stagnation of the forest industries. Silva Fennica vol. 16 no. 4 article id 5165. https://doi.org/10.14214/sf.a15080

Abstract

Certain trends in the sales behaviour of private non-industrial forest owners suggest that the forest industries have to rely on a raw material supply much less than the allowable cut. This paper deals with several factors responsible for the change in sales behaviour during the last 20–25 years. These changes are caused by social change, a multi-face process which is led by industrialization. It is manifested in the increasing division of labour, more pronounced strive for efficiency, change in social values for the benefit of the adoption of innovations and thus of further changes.

It has become more common than previously to borrow money instead of selling timber. An incentive for doing so is provided by the increased progression of income tax scales which makes it more profitable than earlier to substitute a loan for timber sales with a view to reduce the amount of taxes. In 1977, the real value of the farmers’ debts was 1.7 times as large as in 1970. Inflation provides a further incentive to borrow money rather than to sell timber, because it tends to reduce debts, whereas a growing stock keeps increasing without affecting the property taxation, maintaining its real unit value.

Certain forestry policy measures conductive to increasing the forest owner’s willingness to sell timber are suggested. Among the most promising seems to be an adjustment of the present area-based yield taxation so as to take into account the age class distribution of the growing stock.

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Keywords
forest owners; forest taxation; private forests; timber sales; wood supply; behaviour

Published in 1982

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Available at https://doi.org/10.14214/sf.a15080 | Download PDF