A conversation with Indulis Kovisārs, President of the Latvian Forest Industry Federation

As the months of 2020 pass, there is much talk about the situation in the markets and the need to stabilise and strengthen the economy. On the one hand, while it is acknowledged that the forest and related sectors, including, of course, the wood industry, are the backbone of the Latvian economy, a second side is also visible: various and not always understandable attempts to influence, disturb or hinder the industry's work. It’s a contradiction. Are we sawing off the branch we are sitting on?

I cannot tell you the reasons because I do not know them, but recently there have been massive attacks on the industry or an obvious desire to make the stable unstable. No effort is being spared for such goals. Why? As I said – it is not clear or understandable. The situation can be analysed from various angles: one would be the political and administrative one, where for some time there has been talk about the potential listing of the shares of nine state-owned enterprises on the stock exchange, but in fact, someone just wants to get their hands on these enterprises. Some time ago, these nine state-owned enterprises were deemed 'untouchable', with the idea that this status might be reviewed every five years. What has been said publicly, at the level of the Cross-Sectoral Coordination Centre, is full of distorted information. (I can, of course, only speak about the forest industry – about Latvijas valsts meži.) Once again, reference is made to some OECD principles, which, in my opinion, are pointless. Within the framework of this 'campaign' or explanation, the article by Vladislavs Vesperis, Deputy Head of the Cross-Sectoral Coordination Centre, titled 'What the centralisation of state-owned enterprise management means and why it is necessary' ('Delfi', 3 July 2020), was quite disturbing, as it contains a reference to the Finnish experience. I have worked with the Finns quite a lot, I know the Finnish forest administration well, and I can confidently say that to fully understand the forest management system in Finland, you need to have much broader knowledge. The article is prepared professionally, but in the last ten years, the Finns have changed many things in forest management that are not mentioned there.

The problem is that the author of the article is a leading official at the state institution, the Cross-Sectoral Coordination Centre, who spends both taxpayer-funded working time and finances on the preparation of such fundamentally incorrect articles…

We must not forget another important thing: Vladislavs Vesperis is both a high-ranking official and a docent at the LLU.

The second perspective characterising the situation concerns climate change and its various translations and interpretations, including GHG emissions, the ecological footprints left by various processes, and many other issues. I will not delve into them because I am not an expert. But since April and May of this year, new winds have been blowing across European Union member states. 30% of land area is mentioned as necessary for nature conservation needs... However, there is no clarity on whether we are talking about 30% of the entire EU territory or 30% of the territory of each member state. Listening to this idea, I look with positive irony at the Netherlands, which will now set aside 30% of its territory for nature, even though for centuries they have laboured hard to gradually 'take back' 5-6% of their existing territory from the sea. Yes, if we look at the Finns, the Swedes, and ourselves, maybe there wouldn't be huge problems! However, there is always the possibility that someone might get the idea to 'help the rest of Europe', a phenomenon that has been observed in Latvia.

Not so long ago, at a Saeima committee meeting, an idea was voiced about 'reserve territories for protected areas'.

For instance! We know well that with the appearance of certification systems, one of the primary slogans of these systems is: 'to get ahead of legislation and the regulatory environment'. This idea, too, can be translated and interpreted in various ways. The desire to be the first is a human trait!

The third important point, when talking about attacks on the industry, is its monolithicity or unity. It was quite correctly written in the binding documents at one time that state forests have a stabilising function in the industry. The industry’s opinion on the change in the governance model of state-owned enterprises is beyond doubt: we do not support it! Speaking about the mentioned change in the principles of selling timber assortments, it is clear that technology is developing and we must keep up with the times or even be slightly ahead, but... To attempt to rapidly and thoughtlessly transform any of the basic principles of economic activity in a sector that is important for the entire Latvian economy is, in my opinion, neither farsighted nor wise.

We must keep in mind that this is our only and very valuable renewable resource! Oil, after all, is currently considered 'bad'…

…with negative value! When talking about balanced, sustainable development, everyone can translate or understand it differently. I was surprised by the operational priorities of the Saeima committees (the Saeima Mandate, Ethics and Submissions Committee reviewed a citizens' petition 'On the preservation of Latvian forests') especially during the state of emergency declared due to COVID-19, when in April and May issues were reviewed that were not vitally important to the residents of Latvia, nature, or the economy at that time. For example, banning main felling. How does the Saeima evaluate priorities and the working time earned by taxpayers? Unfortunately, that is how we operate…

Representatives of the industry, by the way, were prepared for a worse economic development scenario than what happened: in mid-March, the uncertainty was immense. The uncertainty is still there, but – if one can say so – it is less! A large part of the industry's companies are still planning for a 3-6 week period. Subjectively assessing, the financial results, looking at the period from mid-March to the beginning of August, are better than we projected.

Given the overall stance, quite a few expected that the agricultural and forest sectors would not withstand, and these 'many' would be able to rub their hands. It happened differently, which caused disappointment for those expecting it. But speaking of massive attacks on the industry, two petition initiatives in the Saeima, the putting of the so-called 'tree diameter project' into a drawer: all this took place with malicious but short-sighted joy.

I am an incorrigible optimist! I have had both the honour and the opportunity to participate in the preparation of the initial impact assessment report for the draft Cabinet order 'On the maximum permissible timber harvesting volume for 2021–2025'.

Unfortunately, there is one tradition that does not change: looking at documents on my computer from 15 and more years ago, I found that the industry even then (in 2005) was asking the state to set the maximum permissible harvesting volumes in state-owned forests at least half a year before the start of the new period. Half a year – that is the last possible moment. The previous time, the relevant Cabinet order was passed at the end of November; this year – at the beginning of August. This time, it contains some not-very-clear sentences. In my opinion, when speaking about economic issues, the Cabinet of Ministers must be precise in its decisions: whether the permissible volume for the next five years is the specific one indicated, or whether it is different. Disclaimers about habitats or nature census are not acceptable in business! When adopting the basic guidelines for the forest and related sectors, we talked about this. Years go by – there's still no clarity! This problem, by the way, applies to any forest owner – whether an individual, a municipality, or the state.

In Latvia, unlike in Finland or Sweden, there is an extreme or feigned distrust of forest owners. There is no basis for this distrust, only incomprehensible goals. As a result, Latvia faces a situation where timber is simply being left to rot. This has been discussed a lot, but politicians, while seemingly understanding the problem, understand its 'supposed' unpopularity.

My approach to the situation is simple: I believe that there are far too many legal acts, regulations, and norms governing and regulating the industry. The industry is often unable to administer, analyse, or understand them all. It is a laborious exercise that consumes resources, including money. There are exceptions in every society, but the Latvian forest owner is educated, intelligent, knowledgeable, and the basic postulates are clear to the Latvian forest owner! Regulation – what is allowed, what is not, what is needed, what is not – is a very serious and development-hindering problem for our society.

Often in Saeima committees where important issues are discussed, the situation is unpleasant. Two or three committee members are listening, others are looking at their phones, walking around, talking, not listening and not delving in. Those for whom the decision is important are sitting and watching this 'work'. What is the point of it all? What is the point of an entrepreneur’s or organisation member's time if there is an uninterested or ignorant deputy on the other side? For an entrepreneur and the economy as a whole, this attitude is annoyingly tragic!

One thing is for sure – a Saeima deputy cannot physically read everything, let alone delve into it, because the volume of regulatory documents is enormous! So, something is not right! I am not inciting a revolution, but I am certainly calling for reasonable and effective steps! In Latvia, we have about 2 million inhabitants. We can only allocate the resources needed for administration as much as is necessary, and we must not artificially increase them! Whatever there is, it must suffice!

As far as is known, in Estonia, decisions are explained to deputies carefully and diligently. Before deciding, the deputy, let's say, is trained on what the issue is about.

I really hope, and it is my conviction, that the industry has operated successfully so far, without committing major follies. In the near future, nothing foolish should be done either. We have been restrained and composed.

What have we not done? In this century, there has not been a single massive protest or rally, if you don't count 2011, when cargo trucks, mainly timber trucks, drove slowly along 11. novembra krastmala, thus protesting against the government’s decisions at that time.

But! Simply put, issues necessary for the entrepreneur and the state have not been resolved for years and decades. Decision-makers at various levels and those preparing decisions know this very well, but they do nothing. That should be changed. If they don’t hear us, the tactics must be changed! I am not calling for strikes, but in recent months, there has been talk and discussion about sharper objections against political deafness and the ignoring of issues or putting them into drawers.

By the way, I believe that those who think differently, i.e., the industry's opponents, would gladly see us – from forest owners to timber processors – less pragmatic, less united. Someone really dislikes the industry’s unity. Of course, we compete with each other, but we understand well that disputes are pointless. If there are problems, one must come, talk, look at what is happening today, but most importantly – what will be tomorrow! Trying to 'rewind the film by 10 or 15 years' will require huge resources and will have little purpose. Issues must not be solved primitively. We are very professional, we are in a very specific, but equally advantageous geographical market situation. That must be maintained and used!

One must think about the development of further production trends in Latvia and work on it! Positively, Latvia has a developed board industry. We can think about cooperation with Estonia. A couple of years ago, there were ideas, but they stopped without being realised. Here, one must immediately talk about electricity costs, where, for example, Scandinavian sawmills undoubtedly pay less for energy resources. Therefore – competition!

A brief comment on the problems of developing the FSC National Standard in Estonia, where 'indigenous people' were suddenly found (for explanation, please see below).

It is nonsense! Looking at certification and the development of the certification system in Latvia and the Baltics, this process has gone beyond logic and reason. For 15 years, the Latvian National Standard has been under development, where discussions take place in working groups that humiliate and offend reasonably thinking participants. It is not an intelligent conversation, and an entrepreneur has no time to spend senselessly. However, the situation is such that without certification, we cannot compete in international markets.

But what about the undeniable advantages of wood at a time when so much is being said about replacing fossil resources?

Quite right, wood products and solutions based on the chemical processing of wood are entering more and more diverse fields in the world! This means that more and more knowledge is accumulating in the forest sector, a very wide transfer of this knowledge to other sectors is taking place, and new partnerships and cooperation are forming. My call is for society to appreciate this and support us in these processes as much as possible. Latvia, together with Estonia and Lithuania, belongs to the Nordic bioeconomy cluster. Compared to other regions in the European Union, it has the largest share of forest area per inhabitant**. Therefore, it is perfectly clear that we are in the global spotlight and will be in the future – both in a positive and a negative sense, because the bioeconomy direction has no shortage of opponents. This places a huge responsibility on us, because to a large extent, the successful transition of humanity from fossil to renewable resources will depend on the Nordic region.

* The development of the Estonian FSC FM Standard has been interrupted because opinions in the Estonian FSC Standard Working Group differed: whether there are indigenous people in Estonia in the FSC sense and who they could be.
Some interest groups involved in the development of the standard believed that in Estonia, besides Estonians, there are other indigenous groups that definitely need to be highlighted (emphasised) in the Estonian FSC National Standard, even if these groups are separate from Estonian society and do not participate in Estonia’s social and political life.
The Estonian forest industry believes that the indigenous people of Estonia (in the FSC sense – indigenous people) are the Estonians who have lived in Estonia for thousands of years and who currently live in an independent, free, and democratic country, where everyone has equal rights, opportunities, and responsibilities, and where human rights are guaranteed.

** Rolf Bjornheden, Skogforsk, Andis Lazdiņš LSFRI Silava (06.05.2019), Nordic-Baltic Network of Operational Research and Development, Joint Work Shop of PROFOR and FORDISMAN networks, Ülemiste Hotel, Lennujaama tee 2, Tallinn.