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Forestry in a transitional economy: Hungary

P. Csóka

Peter Csóka is Chief of the Forest Management Planning service, Budapest.

A portrait of forestry in Hungary today against the background of transition to a market economy.

A middle-aged beech stand

With about 18 percent forest cover, Hungary belongs to the relatively less forested countries. However, its present forest cover is the result of long and extensive afforestation work. While forests covered about 11.8 percent of the total area of the country in 1930, they covered 12.1 percent in 1946 and 18.4 percent in 1993.

The majority of the new forests have been established on agricultural land of low productivity. According to land-use statistics, agriculture occupied 79.3 percent of the total land area in 1950, while this figure had dropped to 69.6 percent in 1990. About two-thirds of the land removed from agricultural production was converted to forests.

The total forest area (stocked and temporarily unstocked) is 1.7 million ha, of which 1.6 million ha are stocked forests. About 350000 ha are considered plantation forests (fast-growing species) with short rotation periods (15 to 35 years); more than 900000 ha are covered with almost natural forests; while the remainder consist of introduced species managed similarly to native forests. Because of the long history of human activities, virgin forests cannot be found in Hungary.

TABLE 1. Expansion of the forest area


Forest area ('000 ha)

Forest as a % of total land area

























Sources: 1930-1980 - Halasz. Historical time series of the major features of forestry development 1920-1990; 1980-1993 - National Forestry Database.

An overwhelming majority of the forests consist of broad-leaved species. Conifers are classed as introduced species, but quite a high proportion of the broad-leaved forests also consist of introduced species, such as black locust (Robinia pseudoacacia) and improved poplars (Populus spp.). The most characteristic feature of the Hungarian forests is the wide variety of broad-leaved species, forming mixed, often multistory stands.

The total growing stock of the country (297 million m3) has been increasing steadily over the past few decades. Most of the growing stock can be found in productive forests (237 million m3) which account for 9.8 million m3 out of the 11 million m3 of gross annual increment.

The annual increment is quite high compared with the European average. The net annual increment in Hungary was 6.2 m3 per hectare, while the European average was 4.3 m3 per hectare in 1990, according to the FAO Forest Resources Assessment 1990 (ECE/FAO, 1992). This can partly be ascribed to the favorable site and climatic conditions, and partly to the relatively high proportion of stands with short - rotation species.

Although wood production is still the most important function, the importance of other benefits is increasing as a consequence of changing social demands on forests and increasing public awareness of environmental issues.

About 7 percent of the total area of the country is under protection, consisting of 154000 ha in five national parks, 378000 ha of landscape protection areas, 29000 ha of nature protection areas and 39000 ha of locally protected areas. Half of the protected areas are on forest land and 59000 ha of these forests are strictly protected. In addition to all of these, a network of 71 forest reserves was established in 1993 in order to conserve valuable ecosystems and study natural succession.

Forest health is one of the major concerns of forestry professionals in Hungary. Various monitoring methods have existed for decades, and Hungary has been actively participating in activities of the International Cooperative Programme on the Assessment and Monitoring of Air Pollution Effects on Forests (ICP Forests) since 1986. Based on defoliation assessments, 42.4 percent of the trees were healthy in 1993 while 36.1 percent were in a warning stage (10 to 25 percent defoliation), 19.8 percent were more than 25 percent defoliated and, out of this, 1.7 percent were dead. Black locust, oaks and Scots pine were particularly heavily defoliated while beech, Turkey oak and hornbeam were only lightly affected. There has been a significant increase in defoliation over the past six years - the proportion of non-damaged trees has decreased by 35 percent. The above indicators show a slight deterioration of forest health. The main reasons are felt to be the very dry climate of the past 12 years, followed by the appearance of several biotic agents, including different fungi, bark beetles and other insects. Air pollution is considered to be one of the predisposing factors, weakening forest health.

TABLE 2. Forest stocks as of January 1993


Area (ha)

Percentage of total

Growing stock ('000 m3)

Percentage of total

Annual increment ('000 m3)

Percentage of total

Oaks (Quercus spp.)







Turkey oak







Beech (Fagus spp.)














Black locust (Robinia pseudoacacia)







Other broad-leaved hardwood







Poplars (Populus spp.)







Other broad-leaved softwood







Scots pine (Pinus sylvestris)







Other conifers














Source: National Forestry Database.

Forest industries

The forestry sector as a whole is under the direction of the Ministry of Agriculture. The majority of the forests, more than 1 million ha, are owned by the state and managed by 22 state forest companies, of which 19 are now under the control of the State Assets Handling Joint-Stock Company. This company is responsible for managing the state properties in various fields of the economy.

The former cooperatives and their successors own 535000 ha of forests while there are about 10000 ha of forests that were private property before the transition era. This latter area is increasing as privatization and compensation (the granting of land as repayment for property or goods nationalized under the previous regime) proceed, and the forests owned by cooperatives are distributed among those who owned them before the collectivization of agriculture. From a legal point of view, the cooperative forests have also been private property since 1991. The most recent estimates put the total number of new forest owners as high as 250000 and the area of forests that are already or will be private including the former cooperative forests - is estimated to be 700000 ha.

From the production point of view, forestry plays a minor role in the national economy. The total GDP was 2080000 million forint (US$ 31756 million) in 1990, of which about 35 percent was produced by industry, 7 percent by transport and telecommunications, 11 percent by trade and 13.5 percent by agriculture. Forestry's contribution was about 2 percent.

The state forest companies underwent planned development since the late 1960s, and vertically organized wood processing complexes were established. This induced relatively rapid development in the field of processing technologies. The last nationwide survey on sawmills was carried out in 1979. Out of the 654 plants registered, about 33 percent were state-owned while 67 percent, mainly very small mills with a capacity of less than 5000 m3 per year, were owned by agricultural cooperatives.

TABLE 3. Distribution of forest areas by primary function

Primary function




Percentage of total

('000 ha)

Productive forest





Seed stands





Game management





Protection forest





Nature conservation










Other forest










Source: National Forestry Database.

TABLE 4. Change in forest ownership

Form of ownership







('000 ha)















State forest enterprises







State farms







Other state














Other state and communities





















1 Legally private since 1991.
Sources: 1930-1980 - Halasz. Historical time series of the major features of forestry development
1920-1990; 1992 - National Forestry Database.

An improved poplar plantation

During the 1980s, the structure of the state sawmilling industry evolved; many small units were closed and the remaining 134 plants produced two-thirds of the total output in 1990. Of the total remaining plants, 35 have a capacity of more than 15000 m3 per year, and one of them can process more than 100000 m3 of roundwood annually.

The wood-based panel industry consists of four veneer plants, six plywood plants, two complexes of particle board plants, one flaxboard plant and one fibreboard plant, producing hardboards only.

The pulp and paper industry operates 30 paper machines in several plants, with a total production of 452000 tonnes in 1990. There is currently intensive research and analysis being undertaken on the state of the pulp and paper industry. Hungary has great surpluses in pulpwood and a large negative trade balance in pulp and paper, which could be reduced by domestic processing of the available raw materials. It is assumed that the country's economic development will involve much greater paper consumption, which is far below the European average at present.

The state-owned sawmilling industry was modernized at the beginning of the past decade and investments were made in the parquet and panel industries. However, the overestimation of desired capacities became the source of many economic problems in the late 1980s and the early 1990s.

Overall, the sector's production showed a steady increase until the mid-1980s, not only was the annual cut increasing, but so was the output of the wood processing industry. For instance, in 1975 exports of primary wood products were 846000 m3, while imports were 1796000 m3. In 1985 exports were 1303000 m3 and imports were 1329000 m3 Of roundwood equivalent. Therefore, through the mid-1980s forestry was one of the most successful sectors of the country's economy.

After this time, however, a period of decline started. One of the problems was that, owing to the income produced, harvesting and wood processing gained more and more importance, while silviculture had to face increasingly serious problems. As a consequence of increasing costs, an insufficient labour force, a rainfall deficit, extremely hot summer periods and, last but not least, increased game populations, regeneration did not keep pace with harvesting and often became the limiting factor of the annual cut. Many experts believe that too large a proportion of the income produced by forestry was spent on developing the processing industry instead of being spent on the forest itself.

A stand of Robinia pseudoacacia

Because of problems in silviculture and wood marketing and because of undesired economic side-effects of the transition, the annual cut started to decrease in 1989 and had fallen to 5.7 million m3 - the level of 1970 - in 1993. The allowable annual cut prescribed by management plans is 8.3 million m3 and is expected to remain at least on the same level in the coming decades. The effect of the decrease is difficult to evaluate because of the financial accounting system applied to silviculture in Hungary. Regeneration, afforestation and many other activities of silviculture are financed from the National Forestry Fund (formerly the Forest Maintenance Fund) to which all forest owners are expected to pay a so-called "stumpage price" for each cubic metre of wood harvested. Consequently, decreased harvesting means decreased financial resources available for regeneration.

Structural and economic changes have affected the human resources as well. The number of employees decreased by about 6000 between 1980 and 1990 to 36000 blue and white collar workers in 1990. The decrease was noted in the field of silviculture, logging, wood processing and construction, while the number of people dealing with office work remained unchanged and an increasing number of people were engaged in providing services. As a consequence of the restructuring, the number of employees has continued to decrease at the beginning of the 1990s.

Transition in forestry

Economic transition influences forestry in many ways. Forests are subject to privatization and compensation (a process that tries to eliminate the drawbacks of collectivization suffered by individuals), while the transformation of kolkhoz cooperatives as well as the transformation of state forest companies is affecting about 1.5 million ha of forests (nearly the total forest area of Hungary).

Economic restructuring had started before the political changes. The Act on State Enterprises gave ownership rights to the enterprise councils in 1985, opening the way for decentralization and privatization. The Company Act of 1988, and the Transformation Act of 1989 gave full autonomy to enterprises in restructuring. The Foreign Investment Act of the same year opened the way to foreign capital in Hungary.

To oversee privatization, the State Property Agency was established in 1990 and the State Assets Handling Joint-Stock Company in 1992. The role of the State Property Agency, among others, is to protect the state's ownership rights, develop policies for privatization, oversee the activities of enterprises to be privatized, assess and evaluate privatization proposals and arrange the sale of small enterprises. The State Assets Handling Joint-Stock Company is responsible for: the enterprises that should be kept either totally in the hands of the state or with a majority state holding; and cooperation in the privatization of those enterprises in which the state wants to keep a minority share.

A softwood stand along a river

In order to maintain state-owned forests, the state forest companies were put under the sphere of competence of the State Assets Handling Joint-Stock Company as an independent portfolio. The companies themselves are under restructuring now and should be transformed to joint-stock companies with majority state shares.

Privatization affects forestry not only by changing the greatest influence on consumers regarding their demand for wood in a liberal, market-oriented economy, but also because the various units of forest industries are subject to privatization. In Hungary, this process was started in the late 1980s. As most of the harvesting of wood was carried out by entrepreneurs, many companies have sold the equipment used for felling, logging and transporting to their former employees. In the wood-based panel industry, three joint ventures were established and then four sawmills were put under foreign ownership in 1991.

A sawmill

The decreasing production of the forestry sector has focused attention on the problems of the large vertically organized state companies. Their large processing capacities are not being sufficiently supplied with raw materials and there are difficulties in marketing their products. The recession in the construction and furniture industry is having a particularly negative impact.

As a consequence of the political decision to separate wood processing from primary forestry activities, the widespread transformation and privatization of wood processing units have accelerated. However, the process is expected to be very long because of a lack of domestic investors.

The pulp and paper industry also went through deliberate privatization and, by mid-1991, more than half of the total capital of the industry was privatized with more than 20 percent of foreign capital. However, the pulp and paper industry is still desperately searching for a way out of its deep recession.

The transformation of agriculture also has manifold effects on forestry. First of all, difficulties in the marketing of agricultural products, a lack of capital and the extensive method of cultivation, characterized by a great vulnerability to climatic stresses, are the neuralgic points of agriculture. Therefore, the decreasing income from traditional activities could increase the interest of private owners in the productive functions of cooperative and private forests, with a possible consequence of temptation for uncontrolled felling. This process can only be controlled with vast efforts and, even then, with difficulty.

According to different studies on the future of agriculture in Hungary, about 500000 to 1 million ha of agricultural land will be abandoned, and it is suggested that the majority of this area be afforested. The afforestation programme has already been started with a project for planting 150000 ha of forests by 2000. The project is financed by the state budget but, because of the structural changes in its implementation, it is behind the original schedule and a delay in completion is expected. Besides its positive environmental impacts, this extensive afforestation is expected to solve part of the problem of rural population and to help relieve unemployment, which is one of the major concerns in Hungary. Planting new forests could provide jobs for some of the almost 800000 unemployed, but the possible future profits from these forests should also be considered when viewing their potential benefits.

On the other hand, the potential role of afforestation in managing unemployment must not be overestimated. There are some concerns about the output of these forests in that mainly small-diameter assortments can be produced; these are available in surplus even now and have very poor market potential.

Forest policy

Efforts to implement sustainable forestry have a long history in Hungary. The first comprehensive Forestry Act was enacted in 1879, with the primary goal of reducing the amount of clear-cuts as well as ensuring that forest management practices were aimed at a more sustained income. To achieve these goals, the Forestry Act imposed state-authorized forest management plans on about two-thirds of all forests.

A recreation forest

The Forestry Act of 1935 went further, making the preparation and approval of forest management plans compulsory for all owners.

After the Second World War, the improvement of wood supply became the major goal of forestry policy in Hungary. To decrease imports of wood and reduce raw material shortages, forestry had to focus its attention on the quality and quantity of wood production. Fortunately, forestry experts were wise and brave enough also to enforce environmental and social aspects into forest management, even during the early 1950s.

Thus, Hungarian forestry policy has always aimed at the improvement of the natural environment and recreational services; however, the main emphasis was put on increasing wood production and the expansion of forest area.

The Forestry Act in force was enacted in 1961. It regulates stocked forests, clearings, roads, alleys, nurseries and open lands embraced by forests, i.e. all lands devoted to forestry regardless of owner ship. Increasing popular concern about air pollution and threats of possible global warming or climate change focused the public's attention on forestry issues. Emphasis is also shifting towards non-wood benefits, while the relative importance of wood production is decreasing. The changing ownership structure calls for an adjustment in forestry policy, which should eventually result in a new bill on Forestry.

Reconsideration of the Forestry Act started in 1990. Many negotiations at the national level as well as workshops and expert exchanges at international level have taken place since then in order to provide background for defining priorities and laying down basic disciplines of the new forestry policy. The main directions of the international processes were also taken into consideration, such as Agenda 21 of the United Nations Conference on Environment and Development (UNCED) and the resolutions of the Strasbourg and Helsinki Ministerial Conferences on the Protection of Forests in Europe.

As a result of the thorough preparations, it is accepted by professional circles that key issues of the forestry policy should include:

· a new approach to forest management, with priority given to the long-term interests of human wealth, nature conservation and sustainable forestry;

· the role of the forest in nature conservation, protection and recreation and wood supply, and the necessary economic and institutional background;

· the optimal shares of different forms of forest ownership and the prerequisites for sustainable management in a diversified ownership structure;

· the coordinating and controlling role of the state in ensuring sustainable management and the main features of state forestry;

· the changing role of foresters within and outside forestry in the public and private sectors and in public relations and international connections.

Although there is a common understanding of the above disciplines, a comprehensive forestry policy has not yet been published. A big effort was made at the end of 1993 and the beginning of 1994 to complete a new bill which might have been considered the essence of the country's forestry policy, but the government decided not to submit it to parliament before the elections in 1994.

The most important questions that have to be answered with or without a new forestry act relate to privatization and the future of state forestry. It is the opinion of professional foresters that a relatively high proportion of state-owned forests is desirable. According to this view, the state's share should remain at 55 to 60 percent and should decrease to 50 percent over the long term as a result of afforestation on private lands. This would require completion of the privatization of some 100000 to 150000 ha of forests that are currently under state control, but big forest blocks, ecologically valuable forests and strictly protected forests should remain in the hands of the state.

It is also widely accepted that all forests, private or state, should continue to be managed according to established and approved management plans. Plans are provided free of charge and could be one of the means of keeping the professional level of management in private forestry as high as possible. However, these plans will have to be significantly revised to make them relevant for the new, small private holdings.

It is suggested that small private forests be managed under joint tenure. There is no tradition in individual management of small forests in Hungary - even the Forestry Act of 1935 embraced the concept of joint tenure. Besides the traditional joint tenure, the establishment of forest owners' cooperatives would also be a viable option. A bill was passed by parliament in early 1994, encouraging private forest owners to form forest associations voluntarily.

In addition to the traditional three levels of forestry education, special training programmes should be organized for new, non-professional forest owners while the forestry literature should be enriched with several publications aimed at these new forest owners. Extension work has already been started and two booklets summarizing basic information and forestry knowledge have been provided free to new owners without forestry backgrounds. Those institutions that represent and serve the interests of society and deal with management planning and supervision should strengthen their capacity to meet new demands. The establishment of regional bodies or a nationwide network to provide professional assistance to private forest owners is currently under consideration.

The structure of state-owned forestry also has to be determined. Many believe that a joint-stock company is not the best possible form for a forest company; rather, an independent body similar to the forest services of many countries should be established. Whatever decision is taken concerning state forestry, problems that emerged in the previous era will have to be solved. The quality and health of forests should be improved by proper regeneration and silvicultural methods. The area of natural or almost natural forests should be increased with the widespread regeneration of native tree species. Clear-cut areas should be reduced to an acceptable minimum and special attention should be paid to their spatial distribution. In addition, an ecological approach to forest management requires a reconsideration of wildlife management, including consideration of hunting and related activities.

In order to provide a smooth transition in forestry, not only do the experiences of the market economies have to be analysed and applied, but transitional countries themselves should share their experiences and cooperate closely in solving shared problems that have their roots in their common history of the past four decades.


ECE/FAO. 1992. The forest resources of the temperate zones: the UN-ECE/FAO 1990 forest resource assessment. Vol. I. General forest resource information. ECE/TIM/62. New York, UN.

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