SEKOT Walter
STRUCTURE OF FOREST ENTERPRISES IN AUSTRIA
The total surface area of Austria under forest10 amounts to some 3.9 million hectares, of which about 3.3 million hectares can be considered managed forest areas. Besides economic considerations, forest enterprises can be classified according to ownership structure and size (area covered), with private ownership representing the dominant category. Even the national forests that were created at the beginning of 1997 under the umbrella of the Federal Forest Enterprise, a joint stock company exclusively owned by the Federal Republic, are managed as profit-oriented private companies. Table 1 indicates the distribution of areas of forest cover by categories of ownership.
Table 1: Forest area by categories of ownership
| Types of Ownership | Area (hectares) | Percentage |
|---|---|---|
| Private and ecclesiastical < 200 ha | 1,647,297 | 47.4 |
| Private and ecclesiastical > 200 ha | 776,226 | 22.3 |
| Jointly-owned | 341,567 | 9.8 |
| Communal | 76,389 | 2.2 |
| Provincial | 44,622 | 1.3 |
| National and other | 589,210 | 17.0 |
| TOTAL | 3,475,311 | 100.0 |
Most statistics, including those furnished by the National Forest Inventory, aggregate the various types of ownership into three main categories: national forests, forests of less than 200 hectares and forests of more than 200 hectares. Slightly over 50% of the total forest area contains holdings of less than 200 hectares. Small-scale forestry is thus prevalent in terms of area, but it is also the number one sector in terms of removals and increment, as shown in Table 2.
Table 2: Forest area, removals and increment by category
| Forest area (ha) | Forest area (%) | Removals (%) | Increment (%) |
|---|---|---|---|
| Forests < 200 ha | 53.4 | 51.3 | 62.5 |
| Forests > 200 ha | 31.6 | 34.6 | 26.7 |
| National forests | 15.0 | 14.1 | 10.8 |
Source: National Forest Inventory 1992–96
The country has some 220,000 forest owners, indicating that the average size of a productive forest enterprise is 15 hectares. However, total forest area is not evenly distributed among owners: there is a predominance of smallholdings, half of the country's forest enterprises manage just 5% of the woodland area, and just 0.5% of the enterprises are responsible for 50% of the woodland area.
SOURCES OF ECONOMIC INFORMATION
For the last 30 years, the Federal Ministry of Agriculture and Forestry has been operating an annual monitoring system to assess the profitability of Austria's forests, the results of which are published on a regular basis. However, the monitoring system is unable to rely on a single source of data covering the entire forest enterprise area and is obliged to draw on a variety of sources. Independently-operated forest accounting data networks offer a further methodological backbone for economic documentation. Finally, the main categories of ownership type represent different levels of sophistication and quality of statistical data which, although not representative of all categories, do serve as valuable indicators for the economic development of Austria's forests.
Sources of economic information for national forests
Covering some 15% of Austria's total forest area and irrespective of their internal structure, national forests are considered a single entity in most official statistics. To date, economic data regarding national forests has been drawn from the following National Forest sources, provided on a voluntary basis:
The balance sheet and profit and loss accounts used to be published as annexes to the annual report, and the primary source for comparing national forests with forests under other forms of ownership was the summarized internal cost accounting report. However, since transformation into a joint stock company, the national forests bookkeeping system has been undergoing reconstruction and development, and for the time being it is unclear which economic data will be available for analysis and documentation in the future.
Sources of economic information for forests of less than 200 hectares
Forests of less than 200 hectares comprise the majority of Austria's forests, covering about 53% of the total forest area. Most of them can best be classified as small-scale farm forests, in which forestry is only one component of agricultural activities. The vast number of very different enterprises falling under this category render the provision of statistics problematic, and there is no independent analysis of such forests. The main sources of economic information are more or less directly related to the national Farm Accountancy Data Network (FADN) set up in line with European Union regulations.
The Austrian FADN is a network of 2,422 farms selected according to a system of quota sampling, in which all major categories in terms of size and type of holding are represented. Bookkeeping is done on a voluntary basis. Under the European Union's rules on FADNs, the Austrian network also covers the forestry activities carried out on farms. The FADN sampling frame covers 75.8% of all forest enterprises of less than 200 hectares, with a cut-off point in terms of the holdings of juridical persons. Furthermore, the sampling frame had lower and upper limits in terms of average net farm return rates (ATS 90,000 or 6,500 ECUs and ATS 1.5 million or 108,000 ECUs).
FADN's economic information on forestry activities is very limited. In practice, it refers merely to average forest size and revenues from the various forest groupings within the sample. In 1995, the average contribution of forestry to total farm revenues was close to 5%, with forestry assuming greatest importance in alpine regions.
In order to obtain more detailed information, a non-representative and arbitrary sample of just 112 FADN farms covering only 4 of the 8 agriculture production regions, but in which the significance of forestry was judged to be higher than average was selected for study in 1973. Between 1985 and 1990, a further sub-sample of small farms with 2–5 hectares of forest land was added to the original sample to gain more insight into the specific conditions of forests of this size. This latter study was restricted in terms of both time and geographical coverage, since only one production region was represented. In addition to bookkeeping for the agricultural network, these farms provide specific data on forestry permitting the compilation of a master balance sheet on the forestry component of farms. For example, costs and labour input are recorded separately for three cost sectors: harvesting, silviculture and other forestry activities (roads, buildings and management).
In line with cost accounting rules, a farmer's own labour is registered as a cost, in reference to the wage rates of forest workers. The forestry income of farms comprises earned income on the one hand and entrepreneurs' profit and loss on the other. Labour input is directly related to both earned income and profitability. Due to the high share of farmers' own labour, total forestry income is usually very positive.
Further findings can be obtained from analysis of labour input and performance: harvesting productivity varies considerable over the four regions included in the sample, with alpine farmers registering far better performance than the other three. Labour input per m3 varies between 1.2 and 3.4 hours, corresponding to productivity of between 0.8 m3 and 0.3 m3 per hour.
The question of accountancy network in farm forestry is currently being examined at international level, through the European Union's MOSEFA (monitoring the socio-economic situation of European farm forestry) project, within the framework of the agriculture and forestry component of the PHARE programme. Under the coordination of the European Forest Institute (EFI), 17 partners representing 13 European countries are taking part. MOSEFA's main objectives are:
Results to date have been presented in three EFI publications.
Sources of economic information for forests of more than 200 hectares
Almost one-third of Austria's forests comprises enterprises exceeding 200 hectares of forest land. In these enterprises, the entrepreneur's own labour input, the relationship of forestry to agriculture and intermittent working are less significant than in smaller enterprises. The number of enterprises in the more than 200 hectares category is rather small, estimated at around 1,000 units, although economic representativeness is currently restricted to less than 400 enterprises exceeding 500 hectares.
The accountancy network of forest enterprises over 500 hectares was established as early as the 1960s. For the time being, the sample comprises 86 enterprises managing about 46% of the total forest area in this category. Although the network is often taken to represent private forestry, various other forms of ownership are present in the sample, including ecclesiastical and even provincial forests. Membership of the network is voluntary. Cost accounting data are collected and recorded on a standardised master balance sheet for forest enterprises. Members are provided not only with their own results but also with those of other enterprises for purposes of comparison. The network's accounting scheme and system of data processing have recently been updated with the addition of new ratios and a database.
EXAMPLES FOR COMPARATIVE ECONOMIC ANALYSIS
A few examples serve to illustrate the information obtained from the different studies, and to indicate some recent developments and general trends in Austrian forestry. The figures refer to national forests, to averages registered by the farm forest network and to means indicated by enterprises of more than 500 hectares. Of the data derived from cost accountancy, a number of rations cannot be calculated precisely because they refer to data from financial accounting. However, the data available are still sufficient to be able to establish surrogates for items such as ‘value added’, ‘turnover’ and ‘cash flow’.
Besides profit and loss, value added is a major economic indicator for an industry. In general, value added production in forestry is on the decline in real terms. Over a period of 15 years, the total income derived from forestry per hectare of woodland fell by almost half. At the same time, however, removals increased. The main reason for this trend was a severe decline in real prices for round wood. Further, in the case of bigger private forests, there has been a significant trend towards outsourcing.
In terms of the composition of income derived from forestry activities, different categories of forest demonstrate noticeable differences: whereas the share of taxes (excluding income tax) is overall around 5%, distribution among entrepreneurs, employees and forest workers varies greatly. Due to the high significance of their own labour, owner farmers are able to retain the bulk of value added for themselves. However, in the bigger forests and national forests, employees and workers are the primary beneficiaries of value added production, and the share of salaries almost balances the share of wages.
Despite problems caused by falling prices, forestry in Austria is still characterized by a remarkable turnover ratio level (profit in relation to turnover), but this indicator also shows a trend towards decline. The high level of turnover ratio can be explained by the fact that earned income was considered part of farm owners' profits.
Maintenance of profitability cannot be taken for granted and represents a challenge for management. The only way to achieve this is through reductions in salaries and wages. However, since real wage rates are rising, the number of forestry personnel has had to be reduced, with the result that fewer people today earn a living from forestry. Over the last two decades, the number of workers in forestry has fallen by 61%.
SUSTAINABLE MANAGEMENT OF PRIVATE FORESTS
Drawing on Austrian experience and knowledge obtained from monitoring the economic situation of private forestry over a period of three decades, it is possible to identify a number of basic prerequisites for the sustainable management of private forests. At least three major elements are necessary for building a framework for managing private forest resources in a sustainable manner:
reliable legal framework: sustainable forestry requires high and long-term investments at low levels of earning power. Forest owners must have faith in the legal framework as a means of ensuring benefits from their investments, in both the short and long term. The main components of a legal framework include property rights, forestry and nature conservation legislation, and taxation.
satisfactory level of income from forestry: economic framework conditions must allow for a minimum level of profitability for sustainably managed forests, otherwise owners will have to overcut in order the obtain income.
non-material interest of forest owners: the non-material interest of forest owners in their property is the most valuable safeguard for sustainable management. Preserving a heritage and a commitment to stewardship are questions of tradition and culture, and act as incentives for keeping and maintaining property. Non-material interest is the major factor explaining why most forest owners in Austria keep their forest property even though the market value of forest land greatly exceeds its capitalized value, and the market rate for capital is far high than the returns on investment in forestry.
