Holding one's ground against the ideas and proposals of various groups — and, still more, against demands that are imposed even though they are unfounded — is currently the most important task facing the whole of Europe, Latvia, the industry and even individual major companies.
So says Māris Liopa, chairman of the Forest Certification Council of Latvia, in an interview. In his view, the next few years will be decisive not only for the forestry sector, but also for agriculture and the peat industry. At the same time, the industries that are "rooted in the land" must be able to explain themselves and communicate simply with the public, among whom, unfortunately, there is a growing conviction that money comes from a cash machine and food from a shop.
What is the current situation?
It all depends on which side you look at it from. From the forestry sector's point of view, the situation over the past year has seen neither radical improvement nor catastrophic setbacks. Of course, the Constitutional Court's ruling, which found the provision reducing the diameter for final felling to be incompatible with the Constitution, has to be regarded as a victory for the so-called friends of nature — one that arose from legal technicalities rather than from the actual circumstances of the case. Let me remind you that, according to Valsts meža dienests data, in 2023 felling by diameter yielded 1.72 million cubic metres of timber, which is 11.5% of the 15 million cubic metres obtained in total. In 2022, meanwhile, this method yielded 1.24 million cubic metres, which was 9.5% of the 13 million cubic metres obtained in total. The share of total timber obtained (13 million cubic metres) was smaller still in 2021, when felling by diameter yielded 1.03 million cubic metres, or 7.9%. The felling potential for three tree species — pine, spruce and birch — will be lower in Latvia. At the same time, forestry regulation in Latvia (when and what you are allowed to do on your own property) is very strict at the state level, even though it is well known that our direct competitors in Scandinavia have no such special state requirements about when and what you may do in your own forest.
At the same time, a significant factor today is competitiveness, particularly within the European Union (hereinafter — the EU). It can also become a very considerable obstacle, especially since Latvian foresters' and timber industry's direct competitor countries — Finland, for example — have neither a felling diameter nor an age restriction; the only condition is that felled areas must be regenerated. Sweden likewise has no felling diameter restriction. The only countries in the region with a felling diameter restriction are Estonia and Latvia. Here we are permitted to fell slightly thicker trees than in Estonia. When felling by diameter in Latvia, the stand must be regenerated by planting quality material, and this created a mechanism for increasing the future value and productivity of the forest and its CO₂ sequestration.
Another significant situation, with consequences the industry has yet to grasp fully (indeed, a shock), was created this summer by the state institution Dabas aizsardzības pārvalde, which placed information in the official data management system "Ozols" about potential — rather than designated — specially protected habitats. There are a good many such areas, which gives certified timber companies well-founded concerns about the scope for using timber resources from forest areas of many dozens and possibly even hundreds or thousands of hectares. I have not heard of anything similar being done in our neighbouring countries to the south or north. Had anyone, before placing such information in an official state database, "measured" the impact of potential specially protected habitats on the national economy, on jobs in the regions, on the volume of taxes paid and on export revenues — the more so when the state purse lacks the money to fund services important to the public and when possible scenarios for raising various tax rates have been under discussion for some time now.
What were these possible additional tax scenarios?
This summer saw the publication of the drafting materials for the state tax policy guidelines, which contained a proposal to assess applying the natural resources tax to timber obtained by clear-felling, or to introduce a "stumpage fee", applying this tax per cubic metre of timber obtained. Of course, those materials included analysis and assessment of the tax system as a whole — value added tax, the small-tax regimes, labour costs, the impact of the corporate income tax reform, the taxation of real estate, and natural resource and climate taxes. A scenario for further action was put forward. These documents say "proposals for discussion", and nowhere is it stated that existing tax rates must be increased or new ones introduced, even though these proposals can de facto be regarded as concrete proposals for changing the tax system. Interestingly, the rates were not mentioned in these documents, while it was noted that the natural resources tax would fall due "after the submission of reports to Valsts meža dienests". If, after clear-felling, the forest is left to regenerate naturally, this tax is paid in full. In other cases a discount could be considered, but 2.1 million euros has already been entered in the table of potential revenue. The industry learned about this from the mass media… Following this "special logic", we may yet see the idea of applying the natural resources tax to the harvesting of agricultural crops — rapeseed, wheat, potatoes, carrots, cabbages — over larger areas, with millions of euros "rolling into" the budget.
Nor should we forget the ideas and threats of applying a CO₂ tax not only to fossil fuels but also to cattle, to be paid by the owner of the herd. Yes, Denmark has already introduced this, but applying a CO₂ tax to cows in Latvia will mean more expensive milk, cream, kefir, curd cheese, butter and cheese. I do not know (I have not seen the calculations) whether Latvian residents' incomes will allow them to buy these. Will such CO₂ tax payments be introduced simultaneously in all EU member states? Or will it be left to each member state, so that the winners are the countries that introduce them last?! The question was, is and will remain topical: are we going to "relocate" dairy and meat livestock farming from the EU to a country outside the EU that does not have to comply with EU requirements on climate neutrality and on restrictions on the use of plant protection products and mineral fertilisers? In effect, such an arrangement is an incentive to move agricultural production out of the EU and elsewhere. That is a dangerous trend, because closely bound up with it are the questions of employment in the regions, tax payments and livelihoods (incomes), and of food supply security as well. Before deciding anything, other countries' experience ought to be assessed and the negative side effects evaluated.
In any case, before taking concrete decisions, decision-makers must measure seven times (or even more) and only then cut — in other words, first model and understand what will change and how, what the gains will be and what the losses. Only when the gains outweigh the harm should a decision be taken. The public must be more demanding of decision-makers, while industry organisations and ordinary people alike should keep a closer eye on draft decisions in the making. The explanation "the EU requires it" is neither acceptable nor justifiable, all the more so as Latvia is one of the EU member states with a right of veto if the proposal in question could cause harm to those living and working in Latvia. This matters particularly in the current geopolitical circumstances, when foreign investors look very cautiously — not to say dismissively — at the prospect of investing in a country that borders an unpredictable neighbour. Diplomatically, that is dressed up in the phrase "we shall assess it". What is more, it is often people living in our own country who cause the problems.
How can those living in Latvia cause problems?
As a few examples show, they can. The news agency "LETA" reported that the World Wide Fund for Nature (hereinafter — WWF) is calling on EU fisheries ministers to decide to reduce catches in the Baltic Sea. The European Commission (hereinafter — EC) published proposals on fishing opportunities in the Baltic Sea for 2025, in which it recognised the need to reduce catch volumes in order to help restore Baltic Sea fish stocks. WWF hopes that the EU fisheries ministers who will take the final decision on catch limits will take both the EC's and the scientists' warnings seriously and set catch volumes accordingly. Magda Jentgena, head of WWF's Waters Programme, stresses that fishermen must not go on emptying the Baltic Sea and its fish stocks. Jentgena rates the EC's proposals and the scientists' recommendations as good, but says they will be meaningless if the fisheries ministers disregard them, "LETA" writes. Everyone has the right to their own outlook and opinion, but by essentially advocating smaller catch quotas in this situation, WWF will reduce the number of fishermen, and hence the number of people living on the coast, as well as the volume of raw material available to fish processing companies, which sell their output on both domestic and foreign markets. That brings us back once again to the question of the volume of taxes paid.
Likewise, talk keeps flaring up of a desire to limit annual peat extraction volumes. In effect, to set a maximum extraction volume, something akin to the maximum permissible quota for felling standing trees in forests owned by the Latvian state, which is set by the Cabinet of Ministers for a five-year term.
If such a solution is introduced in Latvia, there is a risk that a whole range of groups in society will want to reduce the maximum peat extraction volumes step by step, creating tension among the industry's companies, which will have to find a mutual compromise on how to divide up the allocated peat extraction quotas. What potential investor would be prepared to put money into peat extraction and the production of peat substrates under such conditions? I fear only a few entrepreneurs would sign up to it, because the risk is already very high. It looks as though it will only grow in the future. The EU Taxonomy Regulation provides that investors and commercial banks will not lend money for the production of peat or peat-containing products or materials, or even for their use in growing vegetables, tree seedlings or flowers. In effect, peat substrate producers will be denied access to credit, exactly as will the farmers and seedling growers who use that substrate to grow their produce.
Then there is the European Nature Restoration Regulation, whose impact on land use sectors is unpredictable. There is a risk that very large areas of land could be taken out of economic use. Undeniably, implementing decarbonisation policies will demand sacrifices from Latvia, but they should not be sought in the so-called land sectors alone. It seems the moment of truth is not far off, when hide-and-seek will no longer be possible and policymakers will have to state clearly by how much each sector must cut its emissions. Most likely, in unpicking this puzzle we shall arrive at the old truth: whichever finger you bite, they all hurt…
Cutting emissions can go hand in hand with the destruction of jobs. The employment map shows that in Latvia's regions the land sectors provide the lion's share of jobs. In deliberating on land use restrictions, it must be borne in mind that they could substantially alter the future development not only of individual municipalities but of entire regions — and not in the better direction. Land use restrictions will bring losses in production and in the population of the territory that are not directly proportional; rather, the effect is likely to be cumulative. Once working people leave a place, state-provided services there cease to matter too. First the schools are closed, then the post offices, the police stations and the fire stations…
What is to be done?
Industry business organisations must watch what the public administration and politicians in Latvia are doing, and how. Likewise, the country's leaders, heads of associations, businesspeople and every resident must keep track of what is going on and what is being cooked up in EU structures and offices. At the same time, the country's leaders must not be afraid to veto those draft documents that run counter to Latvia's interests. Latvia must be able to defend its interests at every level, particularly in EU structures — if need be by deploying every available means, while not yielding to populist promises of a better life without any guarantees.
The loss of jobs in Latvia's regions will drag with it a shrinking population and a smaller number of taxpayers. Decision-makers, mandated by the people, must take a particularly statesmanlike position. The worst thing of all is the absence of a critical approach, whereby somebody somewhere has recommended something and it is duly written into some draft document that does not match the interests of the state and of those living here. Those in Latvia who put forward "brilliant ideas", meanwhile, really ought to start answering for the consequences they cause — jobs destroyed, settlements abandoned.
There was recently news about a bear's "misdeeds" in the Mālupe area, but there has been no word of the animal's defenders going to see the beekeeper who suffered and helping at least to clear up the damage, let alone covering the losses caused. It would be only welcome if the interests of a narrow group in society did not have to be shouldered by those who come up against the problem.
The most important thing is that the country's political leadership should finally grasp some elementary axioms and simply not accept what are, to put it mildly, odd proposals that can be of benefit solely to the enemies of the Latvian state rather than to those living here. The land management sector is a significant employer, and it should stay that way. Decisions on changes must be based on data grounded in science and research, not on a climate target percentage point figure handed down by the EU! The reckoning must start with people, not with decarbonisation percentages, because a country does not exist without people. Until now we have all too often been forced to do our reckoning from the wrong end…