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Prof. Dr. Wilfried Puwein

Wood Market in Poland towards Stabilisation “Price Setting Systems in Austria” Poznan, 4 th december 2007. Prof. Dr. Wilfried Puwein. In a market economy the ‘Invisible Hand' is setting the price. Price setting systems in Austria. The Austrian wood market Supply Demand Price Settings

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Prof. Dr. Wilfried Puwein

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  1. Wood Market in Poland towards Stabilisation “Price Setting Systems in Austria” Poznan, 4th december 2007 Prof. Dr. Wilfried Puwein

  2. In a market economy the ‘Invisible Hand' is setting the price

  3. Price setting systems in Austria • The Austrian wood market • Supply • Demand • Price Settings • In general • Saw logs • Pulpwood • Fuelwood • Time series components of prices • Trend – cyclical – seasonal - irregular • Towards perfect competition • Control of takeovers and mergers • Outlaw of anti-competitive agreements • Price information systems

  4. The Austrian wood marketRoundwood supply • Domestic supply ~ 16 million m³/year • Imports ~ 8.5 million m³/year Domestic supply, shares 33% wood land owners ≥ 200 ha 13% OeBF-AG¹) 54% wood land owners < 200 ha 1) owned by the Federal Republic

  5. Roundwood supply Woodland owners ≥ 200 ha 1 439 enterprises: private, co-operations, communities, Länder (provinces), R.C. church, monasteries Ø 683 ha/enterprise

  6. Roundwood supply Woodland owners < 200 ha 148 324 enterprises: 40% traditional “forest farmers”, 28% non farming wood land owners with connection to “rural life”, 32% “urban” wood land owners Ø 11 ha/enterprise 30% (2.5 million m³) of the wood harvest is managed by “Waldverbände”

  7. The Austrian wood marketRoundwood demand • Domestic demand ~ 23.5 million m³/year • Exports ~ 1.0 million m³/year Domestic demand, shares 15% fuelwood 4% wood based panel industry 71% saw milling industry 10% pulp industry

  8. Roundwood demand Saw milling industry 1 400 firms (but 65% sawnwood production share of 10 biggest mills) Pulp industry 7 firms Wood based panel industry 10 firms Fuelwood about 2 million households with possibilities for wood fire (fire place → automatic pellet heating)

  9. Price setting in general

  10. Monthly Prices of Soft Roundwood and Export Sawnwood PDSL=9.05+0,16*EPSt+0,06*EPSt-1 R²=0,86 Source: Statistik Austria, WIFO calculations.

  11. Monthly Prices of Soft Pulpwood and Export Pulp PDPW=22,11+0,025*EPPt R²=0,20 Source: Statistik Austria, WIFO calculations.

  12. Annual Average Prices of Soft Roundwood and Export Sawnwood Source: Statistik Austria, WIFO calculations.

  13. Annual Average Prices of Soft Pulpwood and Pulp Source: Statistik Austria, WIFO calculations.

  14. Annual Average Prices of Fuelwood, Crude Oil and Pulpwood Source: Statistik Austria, WIFO calculations.

  15. Price Development, yearly Averages Source: Statistik Austria, WIFO calculations.

  16. Soft Saw Log Price

  17. Soft Pulpwood Price

  18. Fuelwood (beech) Price

  19. Cyclical Price Fluctuations and Trend, 1970-2006 Average annual change in % Coefficient of Variation (moving average deviation from trend) Saw logs 13.8 +0.5 Pulpwood 15.5 –0.7 Fuelwood 23.5 +3.0

  20. Seasonality in the Price Index Source: WIFO calculations.

  21. Price setting in practice • Timber Sale Contracts • Contract period 0-12 month • Price Fixed price • Price Index

  22. Methods of marketing timber Enterprises < 200 ha ≥ 200 ha OeBF-AG In % Selling stumpage ? 12 8 Selling harvested timber roadside 81? 76 19 cif mill 19? 12 73 Source: BMLFUW, Österreichischer Waldbericht, Datensammlung; OeBF-AG.

  23. Methods of marketing timberOeBF-AG Source: OeBF-AG.

  24. Methods of sale and price setting • Sale • Lump-Sum-Sales – in Austria against the forest law • Sale-By-Unit • Price setting • Oral bid or negotiations • Written Sealed Bids “Submissions” for veneer logs

  25. Tendencies towards oligopolistic demand • Concentration tendencies in wood processing firms • Oligopolistic industries can manipulate the domestic raw wood price (by collusion) • Foreign industries  transport costs/cif price relation

  26. Measures against oligopolistic demand • Control of takeovers and mergers • Outlaw of anti-competitive agreements • EU-Competition Law • Collusion and cartels • Dominance and monopoly • Mergers and acquisitions

  27. Problem of Asymmetric Information Setting the price ? Local price information World market information Forecasts: housing starts, business cycle …

  28. Strengthening the position of wood suppliers • Advancement for “Waldverbände” • Price information system • Benchmark - Tyrolean System Report System via Internet: Forest owners  Forest Service of the district  Forest Service of provincial government: Monthly report on prices and harvest recommendations

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