The profitability of forestry in Finland and Russia

Abstract

The purpose of this report is to study the profitability of forestry in Finland and in Russia by describing the methods used for profitability assessment and following up in both countries by using specific examples to calculate the profitability of forestry. Also, the availability of profitability assessment results is studied on a state-level. Finally, the methods and results are compared.These example calculations are based on multiple data sources.Finnish analyses concentrate on nonindustrial private forest owners and the data consists of financial statements from Finnish jointly-owned forests and the follow-up data from Finnish bookkeeping farms. Russian analyses concentrate on the profitability of forestry in the national economy and are generally based on publicly available state and regional level budget information.Differences were found in both the methods used and the availability of profitability assessment results. While in Finland forestry is strongly regarded as a business, Russian methods mainly describe thecash-flow between federal authorities and the regions. The results indicate significant differences in profitability between Finland and Russia. Whereas in Finland, non-industrial private forest ownershave on average benefitted from forestry, in Russia state-level forestry has been heavily unprofitable. Massive regional differences were discovered in Russia. The reasons for these regional differences have remained a mystery.