Metsä Group adopts stem volume-based pricing in regeneration felling in addition to thinning on 25 April 2024. Metsä Group no longer uses the traditional stem pricing for wood trade on regeneration felling sites.
Basing the price on stem volume means trees 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 trees are cut for different upgrading purposes does not affect the price paid to the forest owner.
Metsä Group has been using stem volume-based pricing in its purchases from thinning sites since late 2021. The experiences have been good. In 2023, the approach was used in nearly a third of thinning trades.
“Pricing based on stem volume allows us to optimise the degree of wood upgrading even better in all market situations. The method is transparent and fair for both the forest owner and the wood buyer. We’ve received very positive feedback on stem volume-based pricing from forest owners. I believe the method will become an important pricing method for us in regeneration felling as well,” says Juho Rantala, Metsä Group’s SVP, Wood Trade and Forest Services.
The price based on stem volume rewards forest owners for good forest management. In forests where management measures have been performed at the right time and in accordance with forest management recommendations, the trees are sturdier than in unmanaged forests. This means a higher wood trade income for the forest owner.
When forest owners choose stem volume-based pricing for their wood trade, Metsä Group’s forest specialist provides an estimate of the average volume of trees by tree species and a price per cubic metre for each tree species. In addition, the forest owner receives a chart indicating how the price paid per cubic metre will change if the average stem volume of trees differs from the estimate.
The harvester measures the volume of trees when they are felled. This is used to calculate the average volume per tree species. If the average volume of trees exceeds the estimate, the forest owner receives a higher price per cubic metre than was originally estimated. If the average volume is smaller than estimated, the price per cubic metre decreases accordingly.
In connection with expanding the use of stem volume-based pricing, Metsä Group will discontinue the use of traditional stem pricing in purchases from regeneration felling sites.
In Finland, the most commonly used pricing method in wood trade is the cut-to-length method, in which a fixed price per cubic metre is determined for the thicker log part and the thinner pulpwood part. In this method, it is important that the wood buyer cuts the trunk so that the log part is as big as possible.