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> Forest Report 2015 Condition and Use of Swiss Forests FOEN / WSL 2015
6.3 Economic situation of forest enterprises
Matthias Kläy
> The economic situation of Switzerland’s forest enterprises remains difficult: they have been working with an annual deficit since the 1990s.
> The conditions on the international market are not favourable for Swiss forestry and the wood industries.
Forest management costs cannot be reduced to the extent required to compensate for falling revenues from selling wood.
> Forestry and the wood industries both need better market conditions and further measures for reducing costs and developing new sources of income.
Sources of income and costs of forest enterprises
Since the 1990s, the expenditures of most of the Swiss forest enterprises have been greater than their incomes. On aver- age, they are thus making a deficit, despite subsidies from the public authorities (Fig. 6.3.1). In 2012 alone, the declared defi- cit was 58 million Swiss francs. Results from Switzerland’s forest accountancy network (Testbetriebsnetz der Schweiz – TBN) show that the uncovered management costs of using 1 cubic metre (m3) of wood amount to 77 Swiss francs. An important reason for this is that the European market con- ditions are unfavourable for the Swiss wood industries: the margins and revenues have come under pressure (section 3.2).
Semi-finished and finished goods can be produced abroad at
a lower cost and can, as a result of the strong Swiss franc, be imported more cheaply. This means that Switzerland’s for- estry and wood industries can barely take advantage of the current boom in constructing buildings made of wood.
To some extent, pricing pressure is passed on to the forest owners, whose greatest source of income is revenue from sell- ing wood. One of the biggest items of expenditure for forest enterprises is covering the cost of wages. Wood revenues and wages have developed in opposite directions since the 1960s, i.e. while the wood prices have fallen considerably in recent decades, wages have been rising (Fig. 6.3.2). Swiss forest enterprises have been able to reduce their forest management costs, but cannot keep step with the fall in revenues from the
Fig. 6.3.1 Development of the revenue and expenditure of Swiss forest enterprises (total operation) in million Swiss francs between 1992 and 2012. Source: FSO and FOEN 2013
300 400 500 600 700
350 450 550 650 750
1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012
Million CHF, real
Revenue including contributions from third parties Expenditure
> 6 Social Economy 6.3 Economic situation of forest enterprises 107
sale of wood. This is largely due to the strong fragmentation of both the ownership and the management of the forests (section 6.1), the effort involved in maintaining protection forests and the high standards of services for social wellbeing (e.g. forests as recreational areas).
Forestry
Forestry’s services to foster public wellbeing (in particular for recreation, forest biodiversity, drinking water and CO2 reduc- tion) are currently not sufficiently economically valued and reimbursed. Improved framework conditions are needed in this area (section 6.2). However, increased efforts on the part of the forest owners and their forest enterprises are also nec- essary to make forest management more efficient. The future currently may seem bright for wood as a renewable resource for not only construction and energy but also as a raw material for numerous other applications, in particular for the textile and chemical industries. Nevertheless, it is unlikely that wood prices will reach the level of the (golden) pre-1990s era in the near future. The market conditions for Switzerland’s forestry and wood industries are therefore likely to remain difficult for the next few years. The following measures could, however, improve the economic situation in forestry:
> The forest enterprises need a clear strategic orientation.
This requires a detailed investigation of the economic parameters. The focus should be placed on the core prod- ucts, and only diversified once the demand and willing- ness to pay have been established.
> The number of employees and machines should be aligned with the core task of forest management. The
most efficient methods should therefore be used to harvest the wood and maintain the forest.
> There should be more co-operation among the owners and with specialised forestry service entrepreneurs.
> Forest access must be optimised and new policies for man- aging access must be developed and implemented.
> The services related to general wellbeing must be evaluat- ed in monetary terms.
The federal Forest Policy 2020 (FOEN 2013c) contains several measures that should support the forest owners in their efforts to improve the forests’ economic viability. For example, both the federal government and the cantons have agreed on pro- grammes that promote collaboration between forest owners.
Fig. 6.3.2 The development of the real timber prices for long spruce and silver fir logs (in CHF per m3) and the real wage costs (in CHF per gross hourly wage) in Swiss forestry from 1940 to 2008 (some data interpolated – dotted line).
Source: based on Nellen 2011 and Hess 2011
0 100 200 300 400 500 600
1940 1950 1960 1970 1980 1990 2000
Timber price Hourly wage
Average timber price in CHF per m3 Real hourly wage in CHF
0 5 10 15 20 25 30 35
