The Ministry of Agriculture and Forestry proposes that the Forest Management Association Decree be amended with a specification under which an FMA executive director’s and office manager’s business-activity-related administrative expenses would be covered with funds not drawn from the forest management fees. Forest management fees are tax-like and collected from forest owners.
The Ministry requested that stakeholders comment on the proposed decree amendment by 23 March.
The forest industry thinks that the decree amendment is not sufficient because it fails to establish an equal setting for competition in the forestry services market. The Act on Forest Management Associations needs to be opened for amendment and revised in a way that spins business activities off into an independent company or by making forest management fee voluntary.
More detailed regulation of how forest management fees are spent is in itself not enough to achieve a sufficient and credible distinction between the forestry-promoting measures and business-oriented activities of FMAs. It would not remove the competition-distorting possibility to use forest management fees for the temporary funding of business activities.
Forest management associations in a twin role
The lobbying activities and forestry-promoting measures of FMAs are funded through the collection of a tax-like forest management fee. In addition to promoting sustainable forestry and advising forest owners, FMAs provide paid forestry services to forest owners.
The competitive standing of FMAs is boosted by their legal status and statutorily guaranteed funding. FMAs can market their business services when they contact forest owners as part of their forestry-promoting activities. Corresponding services are also available from many other providers who do not enjoy the steady funding base that the forest management fees create.
The business activities of FMAs must be spun off into independent companies
The special status of FMAs distorts competition in the forestry services market. This makes it necessary to separate the forestry and timber sales services of FMAs from their lobbying and promotion work into independent companies. An alternative to the spinning off of business activities is to make the forest management fee voluntary.
Only these measures can establish equal competitive conditions for all actors in the forestry services market. Forestry centres recently implemented corresponding changes when their business-oriented activities were separated from the interest group function with a legislative amendment.
Anu Islander, Senior Adviser (Forestry), Finnish Forest Industries Federation, tel. +358 9 132 6678, +358 40 729 3678