Promotion of forest owner cooperatives in Lithuania – Policy strategies to facilitate sustainable forest management Torben Hansen Supervisors: Vilis Brukas Swedish University of Agricultural Sciences Master Thesis no. 207 Southern Swedish Forest Research Centre Alnarp 2013 Promotion of forest owner cooperatives in Lithuania – Policy strategies to facilitate sustainable forest management Torben Hansen Supervisors: Vilis Brukas Examiner: Mattias Boman Swedish University of Agricultural Sciences Master Thesis no. 207 Southern Swedish Forest Research Centre Alnarp 2013 MSc Thesis in Forest Management – Euroforester Master Program, 30 ECTS, Advanced level (A2E), SLU course code EX0630 Abstract Forest owner cooperatives are often regarded as a policy vehicle to improve the management of private forests and facilitate entrepreneurship in the forest sector. This can be especially important for countries with economies in transition and recently restored private forest ownership. This study provides decision support and policy recommendations for the promotion of forest owner cooperatives in Lithuania. General characteristics of forest owner cooperatives and cooperative entrepreneurship are portrayed as well as the situation in private forestry in Lithuania. International case studies on forest owner cooperatives and public policies in their regard serve to derive elements and aspects of cooperation that are applicable elsewhere as well as concrete policy recommendations for the case of Lithuania. A variety of different entrepreneurial approaches of existing forest owner cooperatives is found to be applicable to Lithuania as well as different policy measures to promote them. Preferably a policy framework consisting of a complementary mixture of public services and financial support should be chosen for the Lithuanian case and implemented with sufficient financial and personnel capacity in order to achieve an effective policy impact. Thus the promotion of forest owner cooperatives holds much potential to improve the viability and sustainability of private forest management in Lithuania. Keywords: Forest owner cooperatives, Lithuania, forest policy, private forest management. 3 Table of contents 1. Introduction ...................................................................................................................................6 1.1 Outline......................................................................................................................................6 1.2 Understanding forest owner cooperatives- a literature review ................................................8 1.2.1 General considerations on forest owner cooperatives ..........................................................8 1.2.2 Cooperative enterprises and business administration ......................................................... 16 1.2.3 Implications for forest owner cooperatives ......................................................................... 19 1.3 The private forest sector in Lithuania ..................................................................................... 20 2. Materials and Methods ................................................................................................................ 23 3. Perspectives of selected Lithuanian stakeholders ........................................................................ 27 3.1 State of forest policy and cooperation ................................................................................... 27 3.2 Problems with cooperation .................................................................................................... 29 3.3 Motivations and policy measures to encourage cooperation ................................................. 30 3.4 Summary of policy suggestions and challenges ...................................................................... 35 4. International case studies on cooperation among private forest owners .................................... 37 4.1 Brandenburg/ Mecklenburg-Western Pomerania .................................................................. 37 4.2 Lower Saxony ......................................................................................................................... 40 4.3 Bavaria ................................................................................................................................... 41 4.4 Austria .................................................................................................................................... 43 4.5 Sweden ................................................................................................................................... 44 4.6 Finland .................................................................................................................................... 46 4.7 USA ......................................................................................................................................... 49 5. Pathways for forest owner cooperatives and forest policies- A general approach and its application to Lithuania ................................................................................................................... 51 5.1 Operational elements of cooperation .................................................................................... 51 5.1.1 Timber marketing ................................................................................................................ 51 5.1.2 Additional services .............................................................................................................. 52 5.2 Organizational aspects of cooperation ................................................................................... 54 5.2.1 Management and organizational development ................................................................... 54 5.2.2 Membership and member participation .............................................................................. 58 5.2.3 Alternative models of cooperation and cooperation across business segments and sectors ..................................................................................................................................................... 59 5.2.4 Cooperative development in the case of Lithuania ............................................................. 60 5.3 Forest policy tools in general and as applied to Lithuania ...................................................... 62 5.3.1 Forest policy goals ............................................................................................................... 62 5.3.2 Forest policy goals in the case of Lithuania .......................................................................... 62 5.3.3 Financial support ................................................................................................................. 63 5.3.4 Financial support in the case of Lithuania............................................................................ 64 5.3.5 Public services ..................................................................................................................... 65 5.3.6 Public services in the case of Lithuania ................................................................................ 68 5.3.7 Regulations .......................................................................................................................... 70 4 5.3.8 Regulations in the case of Lithuania .................................................................................... 70 5.4 Conclusion: A policy framework to promote forest owner cooperatives ............................... 71 References ....................................................................................................................................... 73 Personal contacts ............................................................................................................................. 77 Annexes ........................................................................................................................................... 79 A.1 Cooperative enterprises and their business environment ...................................................... 79 A.1.1 Cooperation and society ..................................................................................................... 79 A.1.2 Ownership, control and participation in cooperative enterprises ....................................... 79 A.1.3 Critique on cooperative entrepreneurship .......................................................................... 81 A.1.4 Rationales for cooperative entrepreneurship ..................................................................... 84 A.1.5 Challenges and responses in cooperative entrepreneurship ............................................... 86 A.1.6 The ability of cooperative enterprises to develop their organizational structure................ 87 A.1.7 Different ownership structures in cooperative enterprises ................................................. 90 A.1.8 The ability of cooperative enterprises to address their members’ needs ............................ 91 A.1.9 The ability of cooperative enterprises to change and adapt ............................................... 93 A.2 Detailed case studies on cooperation among private forest owners ...................................... 95 A.2.1 Germany ............................................................................................................................. 95 A.2.2 Brandenburg