In 2022, the operating profit of private forests averaged 162 euros per hectare. It was on average ten per cent higher for forest owners who had a forest asset management agreement with Metsä Group.
According to Juho Rantala, SVP, Development at Metsä Group, a good operating profit points to active forest management.
“The ‘secret’ of a good operating profit lies in timely, high-quality forest management work.”
Metsä Group’s forest asset management agreement is suitable for forest owners who engage in wood trade and carry out forestry work in their forests every year. It encompasses the annual planning and performance of work as agreed with the forest owner. Thus, the forests of management agreement customers are managed actively.
“In Finland, forests grow even if they aren’t managed at all. However, by performing forest management we can influence the quality, amount and growth rate of the growing stock. In terms of wood production, good forest management aims to increase the share of valuable log wood,” says Tiina Laine, Forestry Services Manager at Metsä Group.
High-quality soil preparation pays off
Forest management and its impact on the profitability of forestry have been studied a great deal. Each stage of forest management affects tree growth and the success of the following management measure.
The establishment of a new forest begins with soil preparation.
“Soil preparation must be carried out to a high quality to maintain the forest’s productive potential. If you compromise on that, problems will accumulate at later stages of forest growth,” Laine says.
Soil preparation makes the planting and sowing site warmer than the surroundings. It boosts the nutrient cycle and hinders the growth of competing grasses and damage caused by the pine weevil. This improves the seedlings’ growth and survival prospects. Studies show that soil preparation keeps the soil temperature elevated for as long as ten years.
“Cheap does not mean cost-effective. Cheaper harrowing may result in higher young stand management costs, while more expensive mounding pays off in the form of less expensive young stand management,” Laine explains.
The right tree species in the right place
Metsä Group always sells and supplies the best available seedlings and seeds to forest owners. Bred seeds and seedlings grow faster into trees of a higher quality.
With the climate warming, it is increasingly important to plant tree species in the appropriate growth sites. This has been a rule of thumb in Finnish forestry for decades. In Finland, naturally occurring seedlings, typically birch, rowan and willow, always emerge among planted seedlings. This is why young stand management and the clearing saw are also needed.
“With young stand management, we steer the competition between tree species and individual trees and help the chosen trees grow sturdy faster. A good rule of thumb is that an investment of one euro in young stand management gives a return of three euros. Young stand management should be considered an investment, not just an expense,” Laine explains.
Rantala points out that timing also makes a difference: every delayed year in young stand management raises the costs of work by roughly ten per cent.
First thinning is the first work stage in the forest life cycle that generates income to the forest owner.
“Provided that the previous stages have been carried out in time and properly,” Rantala points out.
Rantala and Laine agree that despite generating income, first thinning is still primarily a forest management task. Like young stand management, first thinning targets growth at trees with the greatest potential to develop into log wood.
“Light, growth space, water, nutrients – the resources required for growth are limited. Young stand management and thinning reduce competition between the trees left in the forest. This has an impact on growth and forest health. If thinning is not carried out, it takes longer for trees to become sturdy log wood,” Laine says.
Fertilisation is profitable
Growth-enhancing fertilisation suitable for mineral soils is known to be a profitable investment in the forest. If it is done after the second thinning, around ten years before regeneration felling, the increased growth results specifically in log wood.
Rantala estimates that double the euros invested in fertilisation are recovered in wood trade income.
Corrective fertilisation carried out with ash or boron boosts growth in peatland and mineral soils, which lack nutrients vital to tree growth. Subsidies for ash and boron fertilisation can be applied for from Metka, a forestry incentive system.
In peatland ash fertilisation, the subsidy amounts to 270 euros per hectare, and in boron fertilisation, 155 euros per hectare.
Regeneration felling, also known as final cutting, produces the highest income for forest owners. It is also the forest work stage with the greatest impact on the operating result. Ideally, a forest owner’s estate always contains stands at different growth stages, and as the stands reach the regeneration stage at different times, they produce regular income for their owners.
Forest owners seek to time regeneration felling in the economically most profitable way. In addition to the growing stock, this is influenced by the owner’s financial situation and economic cycles. Owner-members can invest their wood trade income in Metsä1 additional shares where they continue to grow.
As the forest grows older, the growing stock increases in volume but its growth tapers off. In other words, the forest’s financial profit in relation to its value decreases year after year. This leads to a situation in which it is better to regenerate the forest and invest the income in something more profitable, such as Metsä1 additional shares.
“What the best time for wood trade is for an individual forest owner depends on all these aspects. It might have been last spring, or perhaps it is next autumn. What we do know for sure is that investments in the forest increase the volume, quality and rate of tree growth,” Rantala sums up.
Text Krista Kimmo
Photo Mika Ankkuri
This text was published in Metsä Group’s Viesti 2/2024.