The board of AS Latvijas valsts meži (LVM) has approved the company's 2024 budget. Due to a decrease in market prices for timber products, LVM's income next year is forecast to be lower than in 2023, reaching €525.3 million, while profit before corporate income tax is projected at €105.1 million. It is planned that 95%, or €499.9 million, of the company's income will be generated from the sale of timber – including roundwood assortments, standing timber and wood chips.
In 2024, a total of 7.52 million cubic metres of timber is planned to be sold, including the supply of 7.35 million cubic metres of roundwood assortments to customers. Wood chip sales are planned at 706,000 MWh.
“Despite the uncertainty in Latvia and the world – the slowing of economic activity, falling timber prices and high inflation – AS Latvijas valsts meži plans to achieve the economic, environmental and social objectives set out in its medium-term strategy next year. Forecasts regarding timber supplies from private forest owners are unclear, as there has been a significant decline in activity in 2023 following record levels in 2022. If this downward trend continues next year, a supply deficit and a shortage of roundwood products for manufacturers may emerge on the market. To ensure stability in the Latvian timber industry, we plan to increase the volume of roundwood assortment deliveries,” explains LVM Chairman of the Board Pēters Putniņš.
More forest to be restored
Both forest restoration and forest maintenance work in 2024 have been determined in accordance with the forest management plan and field survey results. Taking into account the market situation and national goals for achieving climate neutrality, the next year's budget provides for additional reforestation volumes – a total of 19.4 thousand hectares are planned for forest restoration and afforestation. Meanwhile, 38.9 thousand hectares of young stand maintenance are planned. To reduce service costs and address the issue of labour shortages, while simultaneously maintaining high work quality, mechanised solutions are increasingly being used in forest restoration. The volume of mechanised planting for next year is planned at the 2023 level – 1.2 thousand hectares.
High-quality seedlings for the forest of the future
Next year, the plan is to sell 53.1 million forest tree seedlings, of which 56%, or 29.6 million, will be used for restoring LVM-managed forests, while 23.5 million seedlings are intended for sale to private forest owners in Latvia and abroad. Of the total volume of seedlings, 98%, or 52.2 million, are new-technology seedlings – containerised seedlings and seedlings with an improved root system. To provide mechanical protection against pine weevil damage, 16.7 million forest tree seedlings are planned to be treated, including 11.9 million with a sand-glue mixture and 4.8 million with wax.
In 2024, construction is set to begin on seedling storage complexes at the Pope and Valmiera tree nurseries.
Ensuring biodiversity and recreational opportunities for tourists
One of the goals set in the LVM strategy is to provide biodiversity and recreation services from the forest ecosystem. To maintain biodiversity, LVM will continue to implement voluntary measures next year to protect habitats of specially protected species and biotopes of EU importance on 24.4% of the land area under LVM management. On a further 13.2% of the land, LVM will carry out its economic activities while observing additional environmental conditions, such as temporary restrictions on economic activity in forest areas important for recreation.
In 2024, LVM will also continue to ensure monitoring of black storks, lesser spotted eagles, white-tailed eagles, ospreys, capercaillies, and biotope quality, as well as carry out maintenance of forest clearings and floodplain meadows. To leave the smallest possible environmental impact from economic activity in forest areas where forestry machinery has difficult access, the company will continue to use wooden panel tracks to increase soil bearing capacity.
To ensure recreational opportunities for the public, LVM plans to maintain 295 free-of-charge tourist sites across Latvia next year, including 19 tourist sites adapted for visitors with reduced mobility. €1.8 million has been earmarked in the 2024 budget for the maintenance and improvement of these tourist sites.
Also next year, plans include developing recreation and environmental education infrastructure in the LVM Kalsnava Arboretum area and carrying out the renovation of facilities at the LVM Tērvete Nature Park.
Responsible management of subsoil resources
In 2024, the plan is to sell 1,353 thousand cubic metres of mineral materials and their mixtures, including 1,254 thousand cubic metres to external customers. The proportion of certified mineral materials and their mixtures in total sales volume is planned at 100%. Revenue from the sale of subsoil resources and products, and from the leasing of mineral extraction sites to external customers, is projected at €7.5 million.
Increasing revenue from Business System Solutions services
LVM Business System Solutions specialises in the development of geospatial information technology solutions. These developed solutions support LVM's business processes and are also implemented for the operational needs of a number of other companies across various sectors. Increasing external revenue and providing high-quality services is one of the objectives set in the budget for this business division. In 2024, the total planned revenue for this business division will reach €4.3 million.
Developing and maintaining forest infrastructure
The total investment volume in 2024 is planned at €79.62 million, of which more than half, or 53%, is intended for investment in forest infrastructure development – construction, design and supervision of forest roads, drainage systems and bridges, as well as the manufacture of wooden panels. In 2024, the plan is to design 434 kilometres of forest roads, as well as to reconstruct or build 274 kilometres of roads from scratch.
The volume of forest road repairs planned in the budget is 241.4 thousand cubic metres, while maintenance work on road surfaces is planned for a total length of 32.8 thousand kilometres. Cleaning of silted drainage ditches is planned at a volume of 546.0 thousand cubic metres next year.
Donating to the development of the forestry sector
In accordance with the expectations of the owner of LVM – the Ministry of Agriculture – the medium-term strategy, and current legislation of the Republic of Latvia, LVM plans to contribute to the overall development of the forestry sector through donations, by providing support for science and education projects in the forestry sector as well as social projects. The allocation of funds for these donations will take place following the approval of the medium-term strategy developed in 2023. The planned sum for donations in 2024 is €0.9 million.