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Sunday, August 1, 2021

Timber export. “No Polish company can stand this price level.” Industry calls for a ban

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We need a ban on the export of unprocessed wood, said Rafał Szefler, director of the Polish Chamber of Commerce of the Wood Industry. As the industry representative emphasized, entrepreneurs from our country will not be able to financially withstand the competition for limited resources of Polish raw material with international intermediaries. – Due to current practices, Polish companies cannot obtain raw material or obtain it at much higher prices, which affects the profitability of companies and puts them on the verge of bankruptcy – he said.

Bossler told PAP that the sharp increase in wood prices, which affects not only Poland, but the whole world, affects all companies operating in the industry: furniture factories, board producers and, above all, sawmills. Bossler emphasized that Polish producers mainly use Polish wood supplied by the State Forests, and that imports are small, as is the purchase of wood from private forests.

“No Polish company can stand such a price level”

– The difficult situation actually started in May, that is at system auctions. We expected prices to rise, but no one expected that in extreme cases these prices would rise by 200 or 300 percent. We also did not expect so much activity of international intermediaries in the timber trade and foreign wood corporations, which do not have their plants in Poland, but buy wood for the production of finished products for plants located in Europe or for export to the USA, where the prices went up sharply – he described.

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According to the Szefler, these companies are able to buy any amount of raw material and have enormous financial resources. As he pointed out, the price per cubic meter of softwood is between PLN 500 and PLN 700 depending on the region of the country, and the highest prices are in the northern belt, i.e. near the ports where Polish wood is exported. – No Polish company can withstand such a price level in the long run, because the finished product must cover the costs of its production. The client will not pay it – he said. He noted that this increase in prices also affects, for example, construction, because, for example, the roof truss costs twice as much as six months ago.

– About 10 percent leave Poland. round wood, i.e. 4 million cubic meters of wood – it’s official. Although the situation in the US has calmed down a bit and prices are starting to return to normal, we do not know what will happen in six months, when the contracts that were concluded at the turn of spring and summer expire. Prices may soar again. In addition, there is a growing demand from China, where almost all forests have been destroyed, and several percent of the area is left. Today, companies from this country are buying wherever they can and for as much as possible – he assessed.

“You can see fear in conversations with our members”

– In conversations with our members, you can see the fear that if it bumps, it will hurt a lot: the plants will start going bankrupt. That is why all industry organizations are proposing a ban on the export of round timber, i.e. unprocessed timber. And we haven’t been talking about this for a month after prices have skyrocketed. For at least a year, we have been submitting postulates to the government to limit the role of intermediaries in the timber trade and to deal with the problem of wood exports from Poland, emphasized Szefler.

He added that such bans exist in EU member states, such as Romania and Croatia. – In Croatia, this ban is very restrictive, because it is forbidden to buy round timber, that is, cut straight from the forest, and take it out. You can buy wood, but the rules are designed in such a way that you have to process it on site and then take it out. Croats protect their timber plants so that they have jobs. Similar rules apply also in countries outside the EU, such as Belarus, Ukraine, and in a moment also Russia will introduce a total embargo on round timber and intends to introduce quotas for finished products, informed the director of the PGIH.

The representative of the Chamber also emphasized that maintaining the current situation loses not only the wood industry, but the entire economy, in many ways.

– Due to the current practices, Polish companies cannot obtain the raw material or obtain it at much higher prices, which affects the profitability of companies and puts them on the verge of bankruptcy. But this is not the end – he emphasized.

“I don’t understand the reason for keeping things like this”

For example, he explained that one of the international brokers has plants in Europe. He buys wood in Poland, transports it, processes it in his sawmills and this wood returns to Poland as a finished product. – As a result, we do not have a job – foreign workers have it – and Poles pay for the import of a product made of Polish wood. It must be added that the wood leaves the zero VAT rate, so the budget has nothing to do with it. I do not understand the reason for keeping this state of affairs, he said.

According to the Szefler, the situation of the wood industry in terms of access to raw material will be more and more difficult in the coming years due to the EU forestry strategy that is currently being prepared. – The strategy assumes that it is the state forests in a given country that will have to assume the majority of obligations related to forest protection, e.g. reduce harvesting, exclude additional areas from forest management. It is supposed to apply to private forests to a much lesser extent. So, in the Polish reality, supplies from the State Forests – our main source of raw material – will decrease even more – noted Szefler.

In his opinion, the very difficult situation of the industry is not understood by the government. – We have been hearing for a long time that analyzes are underway, but we do not see any proposals to solve the situation. It doesn’t feel like we’re being taken seriously, he said.

Main photo source: Shutterstock



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