Forestry as an investment 2019

In 2019, the decrease in standing sales prices reduced real investment returns on wood production to -0.9%. Compared with the previous peak year, the returns fell by 14 percentage points. The previous year when investment returns were negative was in 2012.

Investment returns on wood production were clearly lower than on average in previous years. Average returns were 6.1% during the previous five years and 3.5% during the previous ten years.

The decrease in standing sales prices reduced the returns by 5.5 percentage points. Income from roundwood sales accounted for +3.7 percentage points of the returns, the value of net increment of growing stock comprised +1.4 percentage points and wood production subsidies covered +0.1 percentage points. The wood production costs reduced investment returns by 0.6 percentage points.

In terms of regions, real investment returns on wood production ranged from -4.1% to +8.4% in Mainland Finland. Returns were positive in all three regions in Northern Finland and in four regions in Southern Finland. The returns were the highest in Kainuu (8.4%) where the impact of net increment on the returns was 6.5 percentage points and the impact of the decrease in standing sales prices was the lowest. The returns were the lowest in Uusimaa (-4.1%).

The decrease in standing sales prices had a negative impact on real returns on wood production in all regions. The negative impact was least effective in Kainuu (-0.7 percentage points) and Lapland (-1.9 percentage points). Net increment of growing stock had a negative impact on returns in six regions. This means that the value of felled trees was higher than the value of the increment of growing stock.

The growing stock calculations use the results of the most recent Finnish National Forest Inventory (VMI12) that are based on measurements conducted in 2014–2018.

In the calculation of returns, income, costs and the value of net increment are proportional to the previous year’s stumpage value calculated on the basis of roundwood volumes and stumpage prices. In 2018, the stumpage value was approximately EUR 53 billion. In 2019, the stumpage value was EUR 51 billion.

Investment return in wood production

Allow functional cookies to show the embedded graph.