In recent years, the forest industry’s annual roundwood purchases from small-scale private forest owners have amounted to about 45 million cubic metres. Present logging volumes leave over 15 million cubic metres of felling potential in small-scale private forests untapped.
About 150,000 roundwood sales are concluded in Finland each year. The vast majority are stumpage sales, in which the seller hands over to the buyer a right to fell a certain amount of roundwood or to a specified logging area. In a stumpage sale, i.e. in a logging contract, the purchasing organisation assumes responsibility for the harvesting of trees as specified in the contract’s terms and conditions. The seller is paid the stumpage price mentioned in the contract for the measured amount of felled roundwood.
In delivery sales, the seller agrees to deliver a certain amount of roundwood to a mutually-agreed location within the contract deadline. The seller is paid the delivery price mentioned in the contract for the measured amount of roundwood.
Correct timing is important
Roundwood sales should be carried out once a tree stand has stopped growing because the value of its growing stock will not increase substantially after this point. Thinning should be taken care in good time because it promotes the growth of the trees that are left standing and thus increases the returns earned by the forest owner. The correct timing for this can be determined from the height of the tree stand’s growing crowns. If a crown contracts too much, the tree’s growth rate slows and the risk of snow and storm damage increases. Insects are also more likely to damage trees if their growth has weakened.
Owners can deduct costs
Roundwood sales revenues are capital income from which forest owners are allowed to make certain deductions. Each year, for example, owners can deduct costs associated with forest management and the selling of roundwood from their sales revenues. At the moment, the Finnish capital income tax rate stands at 30%, but the actual rate is in fact lower once deductions have been factored in. Depending on the actual costs of forest management, forest owners either receive returns for some of the withheld tax or are required to pay more.
There are over 440 000 small-scale forest holdings in Finland with the average size of about 30 hectares.