Dear Reader of HD Forest Newsletter,
What a year 2018 has been! We started out in mud and rain – the mildest and wettest winter anyone could remember – with significant impacts on forest operations. Latvia declared a national natural disaster situation and the timber industries announced major reductions in turnover for 1q2018 due to lack of wood.
Then finally, the rain stopped – we had quite a nice cold period before we went straight into drought in May, and the drought continued until August – the driest and warmest spring and summer anyone could remember. The dry weather was a challenge for the regeneration of the forest, but in terms of access and harvest operations, conditions were near perfect. At the same time, demand for timber and timber prices were very good. In general, our clients managed to take advantage of this situation to harvest especially the poorer quality stands, which are typically more difficult to sell when markets are down.
Weather has always had a big impact on forest operations and the outcome to the forest owner. Assuming a future with more weather extremes, it will be increasingly important for us as forest managers to plan our activities even better and make the most out of good conditions when they arise. Luck typically favours the well-prepared – this will be even more the case in the future.
In the market for forest properties 2018 was also a special year. Two very big transactions were concluded in Latvia in 2018. Foran sold their 50,000 ha to IKEA, and Bergvik sold their 110,000 ha to Södra. In a region where the average forest property is around 5 ha, this sizes of the transactions naturally attracted a lot of attention. Many people (myself included) thought that this would be the entry ticket for the major institutional investors who for a long time have been looking at the Baltics but needed this scale to make an investment. Instead, both transactions resulted in a shift from institutional to industrial ownership. This is of course a result of the current financial strength of the industries, but perhaps also an indication of the increasing focus to secure the resource in the long run. The Battle for the Wood is taking place now – which is not a bad thing for the forest owner.
2018 also marked the 100-year anniversary of Estonia, Latvia and Lithuania as independent states. This celebration has taken place all over the Baltics this year. At the same time, HD Forest marked our 20-year anniversary as forest manager in the Baltics by hosting a one-day conference in Tartu, Estonia on international forest management principles and conditions as inspiration for the Estonian forest sector. A major challenge in the private forest sector in Estonia (as well as in Latvia and Lithuania) is that a lot of the forest is not managed. In HD Forest we would love the opportunity to do something about this.
I hope you will enjoy reading our December Newsletter and with this I want to thank you all for your cooperation and interest in HD Forest. I wish you all a Merry Christmas and a Happy New Year.
Peter Vind Larsen