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Family Forestry and Forest Owners’ Organisations in Finland

Family Forestry and Forest Owners’ Organisations in Finland. Tartu, Estonia 15 th March 2012 Janne Näräkkä, Forestry Adviser Central Union of Agricultural Producers and Forest Owners MTK. Content of the presentation. Family Forestry in Finland Forest Owners’ Organisation in Finland

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Family Forestry and Forest Owners’ Organisations in Finland

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  1. Family Forestry and Forest Owners’ Organisations in Finland Tartu, Estonia 15th March 2012 Janne Näräkkä, Forestry Adviser Central Union of Agricultural Producers and Forest Owners MTK

  2. Content of the presentation • Family Forestry in Finland • Forest Owners’ Organisation in Finland • Forest Management Associations • Jointly-owned forests in Finland MTK/Forestry Group

  3. Forest land 66 % Other land 16 % Agricultural land 9 % Other wooded land 9 % Structure of Land Use in Finland Total land area 30 415 thous.ha, forest land area 20 150 thous.ha Source: Finnish Forest Research Institute 3

  4. Who Owns Finnish Forest Land? Share of forest area, % Private families 62 % Pensioners 19,8% Farmers Wage & salary earners 20,4% 15,5% Entrepreneurs Other private 3,7% 2,4% Others Forest Industry 4,9% 8,9% State 24,4% • 310 000 private forest holdings - 735 000 forest owners • Average size 31 hectares Source: Finnish Forest Research Institute

  5. Forest Ownership Structure in Finland (according to an inventory of 2004-2007) Source: Finnish Forest Research Institute * = according to an inventory of 1997-2007 5

  6. An average age of private forest owners is 60 years • Average age • 54 years • 57 years • 2009 60 years An average age of new forest owners is 52 years Source: Forest owner 2010, Finnish Forest Research Institute 7

  7. Average Size of Private Forest Holdings, ha 63 ( Forest holdings with forestry fee ) Average size in 46 38 Finland 31,2 ha 21 33 25 32 34 33 26 25 22 27 27 9

  8. Family Forestry is characterised by • Multiobjectivity → family forestry incorporates multiple values and functions • Over-generational thinking → the needs of future generations are constantly borne in mind and the forest holding is handed down to the next generation in a further improved condition • Various benefits and services provided to the society → e.g. Everyman's Right - the forests and waters are free for everyone to visit and enjoy

  9. Family forest owners’ priorities MTK promotes sustainable family forestry in accordance with the following principles: • Landowners’ constitutional rights are respected • Forest owners have the right and the opportunity to manage and use their forests in compliance with their objectives • Forestry is economically profitable • Forests are managed in compliance with the principles of sustainable forestry

  10. Finnish forest sector is the backbone of Finnish economy • Forest sector has always played a key role in Finnish economy • GDP share of the forest-based sector 5.9% (2008), 9.5 bn.€ • Employs 77 000 people • Finnish forest-based sector is heavily export-oriented – over 90% of paper and paperboard is exported and over 60% of sawn wood • 20% of net export revenues comes from forest industry • Forest sector is extremely important in rural areas  in many areas 15-20% of regional GDP comes from forest sector • Gross stumpage earnings (private forest owners) ca. 1.5 billion € annually – this means ca. 3.600 € / forest holding • Annual variation of stumpage earnings between 1 and 2 billion €

  11. Wood production is the backbone of sustainable forestry Timber balance in Finland milj.m3 milj.m3 110 110 100 100 Annual growth 90 90 80 80 Annual total drain 70 70 60 60 50 50 40 40 30 30 20 20 10 10 0 0 1955 60 65 70 75 80 85 90 95 00 05 10 Source: Finnish Forest Reseach Institute PEFC/02 PEFC/02 - - 44 - - 02

  12. COMMERCIAL ROUNDWOOD FELLINGS IN FINNISH PRIVATE FORESTS 1955 - 2011e MILL. M3 MILL. M3 55 55 Year Trend Average 50 50 45 45 40 40 35 35 30 30 25 25 20 20 15 15 10 10 5 5 0 0 76 79 82 85 88 91 94 97 10 73 09 55 58 61 64 67 70 00 03 06 11e e = estimate Source: Finnish Forest Research Institute 21.4.2011/MTK Z:\Keskusliitto\Metsä\Kuvat\ENGLISH\Mh_yksit55-.prs PEFC/02 PEFC/02 - - 44 44 - - 02 02 80% of domestic roundwood comes from private forests

  13. Forest owners’ organisation in Finland

  14. Background of forest owners’ organisations • Slash and burn –agriculture and emerging forest industry led to vast decrease of Finnish forest resources in the middle of 19 th century • In 1859 a first governmental forest management authority Metsähallitus (State Forest and Park Services) was established • In 1886 first Forest Act was passed aiming at prohibiting the destruction of forests and safeguarding regeneration after fellings • The fear of decreasing forest resources and the lack of negotiation power towards forest industry led to establishment of forest owners’ first Forest Management Association in 1906 • In 1920’s - after Finland’s independence in 1917 - tenant farmers were given the right to buy the land they had held and managed under their tenancy agreements  Beginning of Finnish Family Forestry

  15. Effective organisation of forest owners is the key The Organization of MTK 2011 154 784 MEMBERS RURAL ENTREPRENEURS FOREST OWNERS FARMERS LOCAL FARMERS ASSOCIATIONS (383) FOREST MANAGEMENT ASSOCIATIONS (FMA) (103) REGIONAL FARMERS UNIONS (14) FUR BREEDERS´ ASSOCIATION REGIONAL FOREST OWNERS’ UNIONS (8) THE OFFICE OF THE CENTRAL UNION OF AGRICULTURAL PRODUCERS AND FOREST OWNERS Maaseudun Tulevaisuus (Newspaper)

  16. Organization of Private Forest Owners • Protection of forest owners’ interests at all levels: • local • regional • national & • international Members of Forest Management Associations 310 000 Forest Holdings, which have 633 000 Forest Owners Forest Management Associations 103 Regional Forest Owners’ Unions 8 Forestry Council of the Central Union of Agricultural Producers and Forest Owners (MTK) 42 members MTK’s Forestry Board 9 members

  17. Forest Policy Organisation: Central Union of Agricultural Producers and Forest Owners (MTK) • A national central organisation of private forest owners • to look after the private forest owners' interests in timber trade • to influence forest policy legislation • to guide the activities of the Regional Forest Owners' Unions, to protect the interests of the Forest Management Associations and to develop co-operation between forest owners • MTK has no position to oblige FO Unions or FMAs – all co-operation is based on voluntariness

  18. Forest Policy Organisation: Regional Forest Owners’ Unions • Regional central organs for local Forest Management Associations • to promote private forestry and to protect private forest owners' interests • to guide and develop the activities of the Forest Management Associations and co-operation between forest owners • to provide guidance and to assist in marketing of forest products • The Unions are mainly financed by Forest Management Associations’s membership fees. • MTK and Forest Owners’ Unions are not granted any state subsidies

  19. Forest Management Associations

  20. Forest Policy Organisation Forest Management Associations • Currently 103 associations covering the whole country and every municipality  fusions decrease the amount of FMAs • Employ 1000 officials and 620 permanent forest workers • Employ also high number of contractors and entrepreneurs • Forest owners’ service organisation on local level: • to promote forest management and utilization as well as other objectives that the forest owners have for their forest ownership • to promote the profitability of forestry • to offer training and guidance in forestry to forest owners • to protect the interests of private forest owners by giving them professional assistance • practical organizer of group certification

  21. Forest Policy Organisation Forest Management Associations • FMAs are working in a close co-operation with the forest owners in all matters related to forests: • forest management services (harvesting, regeneration, ditching etc.) • training and planning services • timber sales services • 80% of the forest management activities in private forests are carried out by FMAs • 70% of preliminary planning of timber sales • Mandatory forest management fee for holdings over 4 hectares  ca. 25 – 30 million €/year for FMA advisory services = ca. 12% of FMA’s total annual turnover

  22. The Purpose of Forest Management Associations • FMA law (534/98, 1§) : • FMA is the union of forest owners, the purpose of which is… • to advance the profitability of forestry practiced by the forest owner and • to advance other goals forest owners have on their forestry and • to advance economically, ecologically and socially sustainable forest management and use In this order!

  23. Forest Management Associations • FMAs are voluntarily founded unions, administrated and funded by forest owners • Law (1998 / 534) and act (1998 / 1227) about the FMAs regulate the operation of FMAs • The members are, unless they decline the membership, forest owners who have the tenure right to a forest located in association’s territory and who are under the obligation to pay the forest management fee (forest area more than 4/7/12 hectares) • The operation of FMAs divided into two blocks: acitivities financed by forest management fee and business activities  have to be separated! • FMA law and FMA act order among other things the purpose, membership, operation area, decision making procedure, forest management fee, use of funds and release of membership • Law also orders how FMAs are allowed to operate in timber markets and in timber harvesting

  24. Forest management fee • Forest owners are entitled to services of FMA by paying the forest management fee • Fee is legal, tax-like payment which tax authority collects from forest owners and accounts to FMAs • Forest owner does not have to pay the fee if his/her forest area is under 12 hectares in Lapland province, under 7 hectares in Oulu province and under 4 hectares elsewhere in Finland • Forest management fee consists of basic fee and hectare fee: • Basic fee: 70 % of the average stumpage price /m3 of whole country from last 3 years • Hectare fee: FMA can decide. Depends on the geographical location of the FMA. At highest can be 1,5 % -11 % of the average stumpage price /m3 of whole country from last 3 years • For example for 30 hectare forest holding in Southern Finland around 100 €/year • ~310 000 holdings pay the fee  total 25-30 million euro/year • Fee is decided for each year separately • Fee secures that all forest owners in all parts of Finland have the equal right to get advisory and forest management services • Important for small FMAs, for bigger associations not that relevant anymore

  25. Share of timber trade total volume done by FMAs % % 50 50 46 45,2 42,9 42,8 41,4 41,3 40,4 39,8 38,8 38,6 40 40 37,3 36,5 36,1 34,8 32,7 28,7 30 30 20 20 10 10 0 0 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 Tiedot puuttuvat: 1995 Åboland ja Nyland 1997 Åboland ja Österbotten 1996 Åboland, Nyland 2000-2003 ja 2008 - 2009 1.4.2011/MTK Z:\...\Kuvat\MHY\Tulos10\valtak-%_koko-maa.pr4 ja Österbotten Åboland

  26. Amount of Forest management Associations

  27. Renewal of Forest Management Association law • Renewal of FMA law is mentioned in the governmental programme of the current government • Purpose: secure level playing field for different actors on forest service markets  obligatory forest management fee criticized by other service providers • Forest owner’s freedom of choice another central element: • Should forest owner be automatically member of FMA? • Easier requirements for resigning from the FMA membership • Forest owner’s right to choose FMA • The Minister of Agriculture and Forestry will give his recommendation in coming months and some changes are inevitable • In case obligatory financing will be abolished then also society’s requirements for FMAs have to be removed!!!

  28. Finnish forestry has been a success story – FMAs have played a central role milj.m3 milj.m3 110 110 100 100 Annual growth 90 90 80 80 Annual total drain 70 70 60 60 50 50 40 40 30 30 20 20 10 10 0 0 1955 60 65 70 75 80 85 90 95 00 05 10 Source: Finnish Forest Reseach Institute PEFC/02 PEFC/02 - - 44 - - 02 Future?

  29. Forest owners’ perceptions of Forest Management Associations

  30. How important you see Forest Management Association for your private forestry? • 0 % • 20 % • 40 % • 60 % • 80 % • 100 % • TOTAL, 2009 • 5% • 6% • 19% • 30% • 39% • 1% • TOTAL, 2010 • 9% • 5% • 23% • 37% • 25% • 1% • < 19 ha, 2009 • 7% • 6% • 19% • 34% • 32% • 2% • < 19 ha, 2010 • 11% • 5% • 18% • 38% • 28% • - • 20-49 ha, 2009 • 2% • 7% • 18% • 30% • 42% • 1% • 20-49 ha, 2010 • 10% • 4% • 24% • 36% • 24% • 2% • 50-99 ha, 2009 • 5% • 6% • 15% • 29% • 45% • - • 50-99 ha, 2010 • 7% • 7% • 28% • 36% • 22% • 1% • 100+ ha, 2009 • 9% • 4% • 25% • 27% • 33% • 2% • 100+ ha, 2010 • 7% • 4% • 22% • 39% • 29% • - 2 3 4 Can’t say 5 = Very important 1 = Not important at all

  31. What grade would you give to Forest Management Association for defending forest owners’ interest? • 0 % • 20 % • 40 % • 60 % • 80 % • 100 % • 5% • TOTAL, 2009 • 3% • 7% • 28% • 42% • 15% • 3% • TOTAL, 2010 • 4% • 7% • 23% • 46% • 16% • 10% • < 19 ha, 2009 • 3% • 6% • 29% • 38% • 14% • 6% • < 19 ha, 2010 • 4% • 9% • 18% • 49% • 14% • 3% • 20-49 ha, 2009 • 1% • 6% • 28% • 43% • 18% • 20-49 ha, 2010 • 3% • 5% • 4% • 27% • 44% • 18% • - • 50-99 ha, 2009 • 4% • 8% • 25% • 48% • 15% • 1% • 50-99 ha, 2010 • 3% • 11% • 22% • 48% • 16% • 100+ ha, 2009 • 7% • 4% • 9% • 32% • 37% • 12% • 2% • 100+ ha, 2010 • 3% • 6% • 28% • 45% • 16% 2 3 4 Can’t say 1 = Very bad 5 = Excellent

  32. In case law-based FMA fee will be abolished, would you continue your membership in FMA given that the voluntary fee would be the same as current obligatory fee? • 0 % • 20 % • 40 % • 60 % • 80 % • 100 % • TOTAL, 2009 • 28% • 48% • 9% • 6% • 9% • TOTAL, 2010 • 26% • 49% • 13% • 7% • 6% • < 19 ha, 2009 • 23% • 53% • 8% • 5% • 10% • < 19 ha, 2010 • 30% • 44% • 14% • 8% • 4% • 20-49 ha, 2009 • 35% • 45% • 10% • 2% • 8% • 20-49 ha, 2010 • 26% • 51% • 9% • 5% • 8% • 50-99 ha, 2009 • 24% • 52% • 8% • 9% • 7% • 50-99 ha, 2010 • 23% • 49% • 19% • 8% • 1% • 100+ ha, 2009 • 28% • 41% • 12% • 9% • 10% • 100+ ha, 2010 • 18% • 52% • 8% • 10% • 11% Certainly yes Probably yes Certainly no Can’t say Probably no

  33. Jointly owned forests in Finland

  34. Jointly owned forest • Jointly owned forest = forest area which is shared by more than one forest holding and on which sustainable forestry is practised for the good of joint owners • The first jointly owned forests were established in 1886 to prevent overcuttings of forests. The majority were and are still founded because of general scattering of land to secure reasonable forest management for all joint owners. • In Finland there are over 230 jof:s covering over 550 000 ha and there are over 20 000 owners. Average size is 320 hectares ranging from 19 to 85 000 hectares. • Jof boom going on: 2011 over 50 jof:s were established • Cirka 4 % of the area of private owned forests in Finland  might grow up to 15 % • State supports by tax relief in timber selling and lower fees when inhereted forest is attached to jof  objective is to overcome the problem of small and scattered holdings and improve forest holding structure • Partners and administrative committee take care of the administration of the jof

  35. Partners • Approve the regulation, which is confirmed by regional Forestry Centre • Choose the members of administrative committee • Approve the annual report • Confirm the financial statement and admit discharge from liability • Decide on the use of surplus • Confirm the plan of action and the budget

  36. Administrative committee • Organises everyday administration and operation • Is responsible for forest management plan, the plan of action and the budget as far as it doesn’t belong to the tasks of the Partners • Decides on timber trade • Decides on hunting and fishing rights • Takes care of financial recources and other property of Partners • Prepares the annual report and financial statement • Decides on the attachment of new holdings to the jof

  37. The benefits of jointly owned forests • Economical forest ownership • Regular and steady revenues from fellings • Easy choice to old owners and owners who live far away from their forests • Sustainable forestry (necessity of forest management plan)

  38. THANK YOU FOR YOUR ATTENTION!

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