Study Examines Estonian, Latvian Small and Medium Timber Industry
A study by Raideberg Ltd. finds great untapped potential to expand the timber industry in southeastern Estonia and along the Latvian border.
A few kilometers from the Latvian border, a family-run furniture producer named Vipmööbel Ltd. employs a family and a few more workers. Ten years ago, the owner sold his remaining livestock, which wasn't paying the bills, and used the funds to buy machinery for utilizing a plentiful local resource – forests. These days the company, which has carved out a niche market with few regional competitors, is prospering and creating new jobs, reported ETV.
The study, ordered by a cooperative Estonian-Latvian effort to stimulate business activity in the border region, believes that the model used by firms like Vipmööbel Ltd. can fix the problem of low economic activity and dwindling populations in the countryside.
The timber industry in the border region has a diverse group of consumers for products that include furniture, firewood, processed lumber, building materials, wood chips, toys, sap and bark.
The study pointed to a Swedish model, promoting investment partnerships between businesses and local governments.
"If the business achieves a strong foundation, then it can buy out the local government's shares and both parties will be satisfied. One is able to support business and the other can later support the local government through taxes," said study representative Heikki Põhi. "Setomaa and the Ape region are very rich in forests. Much of the forestland is privately owned [...] The people of Setomaa and Ape can successfully profit from exploiting [that resource]."
However, many owners are not willing to clear their forests.
"In reality, there is no excess of available timber [...] From a business perspective, those who own the resource should be more active," said forest industry expert Peeter Sibul. He added that forest owners would have to be more entrepreneurial in adding value to it, instead of simply selling land or unprocessed timber by the easiest means available.