Economy of the Coastal Forestry in Norway – with an Example from Hordaland

Economy of the coastal forestry in Norway – with an example from Hordaland

Kjetil Rødland Department of Agriculture County Governor of Hordaland 1 What will I talk about?

• Short introduction of the county • Competitors, advantages and disadvantages • Economy with different tree species • Activity last years • Potential the next years • Value of our forestry • After logging, what then? • Summary

2 What are we producing in the Norwegian coastal forestry? • Hordaland county (roughly a ¼ of western Norway) is used as an example • 350 000 ha of forested land • 50 000 ha of Norway spruce and sitka spruce • Planted from 1950 and onwards • 500 000 m3 of annual growth • 150 000 ha Scots pine, 300 000 m3 annual growth • 150 000 ha decidious trees (mostly birch), 200 000 m3 annual growth

3 Who’s our competitors?

4 Our advantages

• Norway spruce • Sitka spruce • Easy access to the sea

5 Disadvantages

• Infrastructure • Harvesting techniques for steep terrain • Terrain and climate (when it comes to logging) • Probable prohibition of introduced species

6 Various tree species - economy

Norway spruce Scots pine Birch

M3/ha 500 80 50

EUR/m3 20 12,5 10

EUR/ha 10 000 1000 500

7 Is also reflected in the activity

Cutting in Hordaland 1995 - 2008

100 000 80 000 Spruce 60 000 Pine M3 40 000 Birch 20 000 0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Year

8 Economic figures

• Only spruce from now on, because it is our only economically viable tree species • Profit per cubic metre: 25 % lower than eastern Norway? • Profit per hectare: 0-25 % higher than eastern Norway? • Much focus on log prices per cubic metre, but little on profit per hectare (or other area measures)

9 Potential development next 60 years

Max. cutting of spruce in Hordaland based upon planted area

1 400 000 1 200 000 1 000 000 800 000

M3 600 000 400 000 200 000 0

6 4 8 2 6 0 4 8 2 0 1 2 2 3 3 4 4 4 5 6 0 0 0 0 0 0 0 0 0 056 0 2012 2 2020 2 2 2 2 2 2 2 2 2 2 2064 Year

10 How to realise this potential?

• Massive investments in infrastructure • Is actually phase 2 in the afforestation program • Forest roads • Log quays • Public roads • Minimum 50 mill EUR in forest roads alone

11 1 hectare of spruce

Profit when logged 10 000 EUR

Avg need for road 10 m/ha

Cost of roads 1000 EUR

Cost of silviculture 2000 EUR

Subsidies for roads and silviculture 1500 EUR

Net profit before taxes 8500 EUR

12 What will that mean for the whole county?

• Net profit before taxes for 50 000 ha spruce is 425 mill EUR. • Total value added will be 5-10 times more, hopefully some of it locally • A large population of deer is threatening this value • If same level of damage as in Sogn og Fjordane, we may lose as much of a quarter of the total net profit (100 mill EUR)

13 Reforestation

• The public opinion is not very positive towards spruce • Low levels of planting after logging, in fact only 50 % • Not a crisis when we cut down 150 ha per year, but what when we cut down 1500 ha per year? • Unsustainable in the long run

14 What is happening after logging?

Actual planting of spruce vs need for planting

3500

3000 Need for planting Actual planting 2500

2000

1500

1000 Dekar (1/10 of a hectare)

500

0 2000 2001 2002 2003 2004 2005 2006 2007 2008

15 What with reforestation in the future?

• Quite possible that we can not expect reforestation with spruce after spruce logging everywhere • At the same time we should expect reforestation with spruce after we have logged pine • Because of both economic and climatic reasons • Foundation for a new afforestation along the coast? • Ideally, this should be planned carefullly

16 Summary I

• Our climate is well suited to produce trees • Our 13 % with plantations make up 90 % of our professional forestry • We compete on an international market • The process of getting the logs from the forest to the market is more complicated and expensive here • Will very soon have large amounts of timber ready for logging

17 Summary II

• Total net profit over 400 mill EUR • The deer population is threatening to destroy a quarter of this profit • We also have problems with reforestation after spruce logging • But, big possibilities for a boom next 30 years • Let’s not hope it will become a bust afterwards • I may sound pessimistic, but I am actually an optimist!