B r o a d S p e c t r u m U t i l i s a t i o n o f W o o d

1. B r o a d S p e c t r u m U t i l i s a t i o n o f W o o d June 14th – 15th 2005, Vienna - Austria WOOD PRICES IN POST-SOCIALISTIC ECONOMY Wladyslaw Strykowski, Prof. Dr. Wood Technology Institute, Poznan, Poland

2. WOOD PRICES IN POST-SOCIALISTIC ECONOMY Wladyslaw Strykowski, Prof. Dr. Wood Technology Institute, Poznan, Poland In market conditions, wood and forest products prices represent the main economic category of the forest-wood sector resources management!

3. WOOD PRICES IN POST-SOCIALISTIC ECONOMY Wladyslaw Strykowski, Prof. Dr. Wood Technology Institute, Poznan, Poland • Key drivers of the forest-wood sector: • appropriate roundwood prices • stable macro-economic policy • free trade • development of sector analyses • need for environmental protection

4. WOOD PRICES IN POST-SOCIALISTIC ECONOMY Wladyslaw Strykowski, Prof. Dr. Wood Technology Institute, Poznan, Poland Ownership structure of roundwood removals in Poland Private forests 4% Public forests 96% • 99,5% owned by the State Treasury • of which: 98,9% State Forests • 0,7% national parks • 0,5% local community owned

5. WOOD PRICES IN POST-SOCIALISTIC ECONOMY Wladyslaw Strykowski, Prof. Dr. Wood Technology Institute, Poznan, Poland the maximum wood prices are set by prices of roundwood alternatives (cement, steel, plastic, non-ferrous metals, etc.) = DEMAND € the minimum wood price is represented by the cost of removals(of which: costs of planting, nurturing) = SUPPLY

6. WOOD PRICES IN POST-SOCIALISTIC ECONOMY Wladyslaw Strykowski, Prof. Dr. Wood Technology Institute, Poznan, Poland • The regional differences in prices of the same wood sortments and types can be attributed to: • general level of development of individual regions • natural location • regional market supply and demand which depend,amongothers, on the number of woodworking plants and volumes of roundwood generated in individual regions • roundwood sales methods (tenders, free market sales,etc.) • cost of roundwood transportation to woodworking plants • potential for competitive imports of roundwood fromabroad(this factor is of special importance in the borderareas)

7. WOOD PRICES IN POST-SOCIALISTIC ECONOMY Wladyslaw Strykowski, Prof. Dr. Wood Technology Institute, Poznan, Poland • The main factors that can drive the global demand for roundwood to a different extent and, as a result, drive price fluctuations: • population growth • general economic growth (economicdevelopment) • technical progress

8. WOOD PRICES IN POST-SOCIALISTIC ECONOMY Wladyslaw Strykowski, Prof. Dr. Wood Technology Institute, Poznan, Poland World populations * estimations Source: FAOSTAT

9. WOOD PRICES IN POST-SOCIALISTIC ECONOMY Wladyslaw Strykowski, Prof. Dr. Wood Technology Institute, Poznan, Poland • Technological and product innovations play an important role in the entire forest-forest industry chain. These innovations are aimed at: • improving biological characteristics of trees, includingefficiency of a unit space • reducing cost of processing and increasing material efficiency • designing new and attractive forest products to win new sales markets

10. WOOD PRICES IN POST-SOCIALISTIC ECONOMY Wladyslaw Strykowski, Prof. Dr. Wood Technology Institute, Poznan, Poland • As regards roundwood, demand generated by buyers is the key pricing driver. However, pricing can be impacted also by such factors as: • costs of roundwood removals • costs of transport, in particular in the case of roundwood imports • costs of forests exploitation (excluding rental fees or land prices) • costs of forest non-production functions; delivery of these functions by forests (without the State subsidies) significantly increases the ongoing costs of forest management which translates directly into wood prices

11. WOOD PRICES IN POST-SOCIALISTIC ECONOMY Price of lumber Economic cycles Production of alternatives assortment € Sales forms Price flexibility Imports of roundwood Quality-size parameters of individual sortments Wladyslaw Strykowski, Prof. Dr. Wood Technology Institute, Poznan, Poland Other price drivers