In the new method, a price based on stem volume is paid for trees removed in thinning. The method was developed to optimise the value from converting in all end product market situations.
The stem price method based on volume means that the trees to be thinned are purchased as whole trunks, and the price paid to the forest owner is determined based on the average volume of the trees removed. How the trunks are cut into pulpwood and logs does not affect the forest owner’s income from wood trade.
As trees can be cut into suitable assortments based on need and market situation, the stem price method based on volume is competitive compared to the traditional log-pulpwood pricing.
“Our forest specialist uses a modern measuring tool to evaluate the sturdiness and quality of trees. We use the results to determine a price based on stem volume for each tree species on the felling site,” explains Juha Jumppanen, SVP, Wood Trade and Forest Services, Metsä Group.
The forest specialist provides the forest owner with an estimate of the average volume of the felled spruce and pine trunks, as well as the price paid for one cubic metre of each tree species.
“In connection with wood trade, the forest owner also gets a chart indicating how the price per cubic metre changes if the volume deviates from the estimate,” says Jumppanen.
After harvesting, the harvester provides an accurate result on the average volume of the removed trees. If the result exceeds the forest specialist’s estimate, a higher price will be paid for the wood, and in the opposite case, the price will decrease.
“The most common thinning method is to remove trees of a poor quality and with weak growth to leave the best trees more space to grow into sturdy log wood. If sturdier trees are felled, this increases the price,” says Jumppanen.
To date, Metsä Group has purchased wood at a fixed stem price from regeneration felling sites. It is easier to evaluate the sturdiness of trees on such sites than on thinning sites. In the case of regeneration felling, harvesting does not affect average sturdiness, because all the trunks, with the exception of retention trees and valuable natural sites, are removed.
“We want to expand the use of pricing based on volume and make cutting more flexible so that we can optimise the value from converting, whatever the market situation for end products,” says Jumppanen.
“We piloted stem pricing based on volume in the autumn of 2020, and received very positive feedback from forest owners. All the participants were willing to use the new pricing method to sell wood from their next thinning site.”
The new pricing method will be introduced in June in Metsä Group’s Lohja, Oulu, Jyväskylä and Joensuu procurement districts in Finland. The method will be expanded to all of Finland by the end of the year.
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