MAUNO PAKKANEN
MAUNO PAKKANEN is a member of the board of directors of Metsäliitto (the commercial central organization of forest owners in Finland).
Collaboration between private forest owners has stimulated their development
FINLAND is for its size one of the most richly forested countries in the world. Almost three-quarters of its area consists of forests, which cover 54 million acres (22 million hectares). This works out at 12 acres of forest (5 hectares) per inhabitant.
The predominant tree species are pine (Pinus silvestris - 44 percent of the total), spruce (Picea excelsa - 36 percent) and birch (Betula verucosa and Betula pubescens -18 percent). The total growing stock amounts to some 1,500 million solid cubic meters and the annual growth to about 46 million solid cubic meters (over 10 cubic meters per inhabitant).
Private forest owners, the vast majority of whom are farmers, own 62 percent of the total forest area, the State owns 28 percent; commercial companies, 7 percent; and others 3 percent. About 70 percent of the annual growth occurs in privately-owned forests.
TABLE 1. - CAPACITY OF PRODUCTION OF FINNISH INDUSTRIES
|
|
Capacity 1961 |
Production 1961 |
Change from previous year |
|
Thousands |
Percent |
||
|
Sawn goods (standard) |
2000 |
1 296 |
- 8 |
|
Plywood (cubic meters) |
460 |
391 |
- 5 |
|
Particle board (cubic meters) |
140 |
94 |
+ 27 |
|
Wallboard (tons) |
250 |
215 |
+8 |
|
Sulphite pulp (tons) |
1 600 |
1 392 |
+12 |
|
Sulphate pulp (tons) |
1 900 |
1 434 |
+12 |
|
Semichemical pulp (tons) |
150 |
102 |
+50 |
|
Paper (tons) |
2 100 |
1 706 |
+18 |
|
Paper board (tons) |
860 |
698 |
+33 |
Not counting those of less than 10 hectares, the average size of a forest holding is 33 hectares. On this basis, there are some 220,000 private forest owners in Finland. It can be said that the forest is an integral part of every farm and that Finnish forestry is rooted in the farm forest.
Since the beginning of the 1960's the Finnish wood-processing industries have been going through a phase of rapid growth. This applies particularly to pulp production, the growth of which has been:
|
Type of pulp |
Tons per year |
|
Mechanical |
350,000 |
|
Sulphate |
270,000 |
|
Sulphite |
850,000 |
|
Semichemical |
130,000 |
All the increases in mechanical and semichemical pulp, and over 300,000 tons of the extra chemical pulp produced, is being absorbed by Finland's paper and paperboard industries. The rest of the extra chemical pulp is being exported.
The growth of the paper and paperboard industry is roughly:
|
Type |
Tons per year |
|
Newsprint |
400,000 |
|
Other paper |
190,000 |
|
Paperboard |
370,000 |
This production growth is raising the total capacity of the pulp and paper industries by about 45 percent. In addition to investments to increase production proper, many wood-processing plants have large projects under way to rationalize production, improve quality, etc. The expansion of the pulp industry calls for an extra 8 to 9 million piled cubic meters of roundwood every year. The growing capacity is creating a demand for an extra 5,000 to 6,000 workers in the factories and 55,000 to 60,000 in forest operations and transportation.
The story behind this rapid expansion is an interesting one. In the autumn of 1957 the Finnish mark was devalued. This decisively increased the profitability of the export industries. During the remainder of the 1950s, the State levied export duties on wood industry exports, but at the end of the decade these were plowed back into the industry in the form of loans. The wood-processing industry also managed to obtain big loans from abroad and it seemed that Finland would be able to associate itself with the European Free Trade Area.
This expansion of production is shortly to be followed by another which, although smaller in scale, will nevertheless call for still bigger supplies of raw material. This new phase of expansion has already begun and will end around the year 1965. The capacity of the pulp industry will then be about 4.2 million tons. The share of organizations of forest owners in all this expansion amounts to around 15 or 20 percent.
While the raw material requirements of the country's wood-processing industries are growing, there is, however, no sign of any diminution in Finland's exports of roundwood. An all-out effort is, therefore, being made to safeguard wood production by improving - forest management and forestry practices.
The measures involved include:
(a) rationalization of management and felling plans;
(b) further improvement of transport;
(c) more and better drainage;
(d) more intensive regeneration of poorly productive forests;
(e) more intensive forest research;
(f) promotion of better forest management among forest owners.
Finnish forestry and foreign trade are largely dependent on private forests. Over 75 percent of the annual cut comes from farm forests. Private owners, most of them farmers, are therefore in duty bound to manage and harvest their country's primary natural resource with the utmost efficiency. At the same time they are entitled to take joint action to ensure that they receive a fair price for their product. For that reason they have entered into co-operative arrangements at both the commercial and industrial levels.
BEGINNINGS OF CO-OPERATION BETWEEN FOREST OWNERS
In the early years of Finnish independence, the wood-processing industries, the most important industrial sector in Finland, undertook united action in the procurement of roundwood. Factories formed themselves into groups which allotted each buyer a purchasing area and fixed the prices. This was quite easy at the time, for the forest owners had no corresponding organization to act as a counterweight. Roundwood prices fell seriously. Industry reaped the benefits and used the profits to build new factories and mills. Naturally, it is in the interests of the forest owners themselves that the Finnish wood industries should be large, modern and competitive but not at any price. The first determined efforts to organize forest owners were made at the beginning of the 1920s. The initiative was taken by agricultural organizations and a company called Metsänomistajain Metsäkeskus Oy (Forest Owners' Center) was founded in 1921.
This organization was legally a limited liability company, but in practice it worked on the co-operative system. It was planned to begin as a central corporation around which local subsidiaries would be formed. These were to be administratively independent, but act in close collaboration with the central company as its suppliers of timber and roundwood. The plan did not succeed, and the project, which had once seemed to hold so much promise, collapsed during the slump in the early 1930s. The subsidiaries split off and disintegrated.
The present commercial organization with its center in the Osuuskunta Metsäliitto (Forest Owners' Cooperative) started in quite a different way. It began in southwest Finland during the hard times of the early 1930s, when the real value of stumpage prices had fallen very low, and was based upon joint sales of roundwood for export. It was formalized at the beginning of 1934, with the foundation of Metsäliitto Oy (The Forest Owners' Company Limited) which had a share capital of 100,000 Finnish marks.1 The share capital was owned by Maataloustouttajain Keskusliitto (Central Association of Agricultural Producers).
1U.S. $1.00 = 320 Finnish market
The new organization exported mainly to central and western European countries, the most important commodities being pulpwood and pitprops. Metsäliitto steadily gathered strength during the years preceding the second world war. Foreign connections were established, the supply organization gained experience, and exports grew. Efforts were also made to sell industrial wood on the home market, but they met with little success and during the war, Metsäliitto devoted its energies to supplying the country with much needed fuelwood.
A new, decisive phase began in 1947. "Metsäliitto's 14 years of activity have created such a durable foundation for the commercial organization of forest owners," states the annual report for that year, "that with its accumulated funds and experience, it is regarded as possible to establish a country-wide commercial co-operative organization of forest owners. It has been decided to adopt the co-operative system because the co-operative idea is deeply rooted among the Finnish farming population and thus has the best chances of acquiring their support and confidence, which such an organization needs for its growth and success."
Thus the Forest Owners' Company became the Forest Owners' Co-operative (Osuuskunta Metsäliitto as from January 1948. The co-operative was formed with the active collaboration of the agricultural producers organization and the Forestry Association. Rapid growth followed immediately. By the beginning of the 1950s, membership was over 50,000. Membership extends only to forest owners, who pay a fee worked out to a specific formula according to the amount of forest land they own and the amount it produces. The growth of membership - and consequently of capital - improved its chances for effective commercial activity. Osuuskunta Metsäliitto soon became Finland's largest exporters of roundwood.
Metsäliitto and industry
Gradually it became evident that the mere export of roundwood was too insecure and would never enable the forest owners to attain the desired control over the development of roundwood prices. The solution was to expand into the wood-processing industries themselves.
To start with, Metsäliitto bought up shares in certain mechanical wood-working plants, between 1948 and 1952, gaining ownership of a plywood factory and of five small sawmills.
The chemical wood-processing industry
But members and management alike were coming increasingly to realize that forest owners should expand also into the pulp and paper industries. On the other hand, to procure a production unit of any effective size would call for so much additional money that some solution had to be found to acquire the necessary capital. The decision was reached at the beginning of 1953: a company was to be formed for the purpose of acquiring pulp and paper mills. Shareholders were to be sought among forest owners throughout the country, and among central organizations and financial institutions associated with them.
Thus was founded Metsäliitto Selluloosa Oy, whose articles of association were signed in late 1953. The subscription for stock was organized in the same way as it had been for Osuuskunta Metsäliitto in 1948. Active collaboration between the agricultural producers organizations, the Forestry Association and Metsäliitto resulted in a subscription list of 1,200 million marks - a unique achievement in Finland. While the subscription list was still open, Metsäliitto Selluloosa Oy bought up the majority of shares in Wärtsilä Selluloosa Oy. Thus the forest owners' own company gained possession of a factory complex in central Finland, which, in addition to a great diversity of wood-processing plants, included both a hydro-electric and a steam power plant.
The company also owned about 28,000 hectares of forest land. Since then the share capital has been raised to 1,680 million marks and the factories have been greatly expanded.
Metsäliitto Yhtymä
In the meantime, organizational development had been continuing in Osuuskunta Metsäliitto and the co-operative's own industrial production had been expanded. A plywood mill was greatly expanded and a completely new particle board factory was built next to it.
By the end of the 1950s, therefore, forest owners had gained possession of two country-wide organizations, Osuuskunta Metsäliitto the co-operative, and Metsäliitto Selluloosa Oy, the industrial joint-stock company. Their members and shareholders were largely the same forest owners and the relationship between them was such that the older established body, Osuuskunta Metsäliitto held the majority of stock in Metsäliitto Selluloosa Oy and had a decisive say in its management, though the latter, as a forest owner itself, was also a member of Osuuskunta Metsäliitto The co-operative bought and sold roundwood, operated mechanical wood-processing mills, and became a ship owner. Metsäliitto Selluloosa Oy processed wood chemically.
This plan of organization was confirmed on both sides by an agreement signed in 1960, by which it was decided in principle to unify the administration of the two organizations, and define the division of labor between them, specifying close collaboration in certain questions of importance to both - such as commercial administration. The result has been a closely knit corporation which has been named Metsäliitto Yhtymä.
The parent body in the new organization is Osuuskunta Metsäliitto (the co-operative) whose membership is restricted to forest owners. The general policy on the co-operative's affairs is decided by a board of representatives elected by Metsäliitto members from among their own number on the basis of "one man - one vote." This Board has the last say in matters concerning joint enterprises by the forest owners.
RECENT EXPANSIONS
Recent years have been a time of very powerful expansion for Metsäliitto Yhtymä. This, and the favor able market situation, have resulted in an immense increase in turnover. The total last year, for instance, was around 14,000,000 million marks. Roundwood purchases have also grown. During the last felling year (June-May) total purchases came to 4.3 million cubic meters. All these figures make Metsäliitto one of the largest wood-industry organizations in the country. The Äänekoski factory complex is incidentally the largest consumer of birch in Finland, using it both for pulping and as fuel. Plywood production is now also being expanded on a large scale, the Hämeenlinna plywood mill being enlarged to double its production, after which it will have a capacity of some 30,000 cubic meters, making it one of the largest plywood and veneer factories in the country.
New industrial enterprises
Completely new enterprises founded in 1961 by Metsäliitto were Teollisuusosuuskunta Metsä-Saimaa (the Metsä-Saimaa Industrial Co-operative), and Oy Metsäliiton Paperi (Metsäliitto Paper Company).
Metsä-Saimaa was founded for the purpose of processing wood from the Saimaa Lake System, the largest single inland-water system in Finland. The decision to found it was made in the winter of 1961 and in the summer of the same year the decision was taken to build a 16,000 standard sawmill, a 25,000 cubic meter blackboard factory and a steam power station burning waste wood. The blackboard factory will utilize the latest continuous process and be the largest of its kind in the country. Operations are due to start in the first half of 1963.
Larger than Metsä-Saimaa is Oy Metsäliiton Paperi in southwest Finland, which will be devoted to chemical wood-processing. Metsäliiton Paperi's subscription list was filled by the last day of January 1962. The share capital totaled 1,750 million marks ($5.5 million).
Initially, there will be an 80,000 ton-per-year paper mill. Later, the output will be doubled by installing another machine of the same size and a 40,000 ton-per-year sulphate pulp mill will be erected. The first stage is due for completion in 1965
These new industries already have a combined capital of some 2,300 million marks - no mean achievement for the forest owners. Combining this with Metsäliitto Yhtymä's other capital, the total capital formed by shares and co-operative members, lifetime subscriptions comes to approximately 4,300 million marks.
PROSPECTIVE DEVELOPMENTS
There can be no doubt of the incentive for the continued expansion in the future of the Finnish wood-processing industries but doubts have been raised as to whether the resources of roundwood available will suffice. Foresters believe that they will - but only provided that the increment is raised to well over its present level and that the wood is rationally and economically utilized. Bright spots on the horizon are the prospects afforded by swamp drainage and regeneration of poorly productive forests. Selective breeding of tree species and fertilization of forest land also offer promise for the future.
Another problem is selling the increased production on world markets. Here, too, the general attitude of forest owners is sanguine, for European and world consumption is expected to grow fast and Finland's conifers are superb material for paper, and are fully competitive in quality.
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WORLD FOOD CONGRESS IN 1963 A WORLD FOOD CONGRESS will take place in Washington, D. a., U.S.A., in June 1963 to mark the mid-point of the FAO Freedom from Hunger Campaign. It is being preceded in February 1963 at Geneva by a United Nations Conference on the application of science and technology for the benefit of the less developed areas. |
