Modern economic POTENTIAL OF UKRAINE

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Timber industry

Forest base

Ukraine follows a steady policy of woodland area expansion. In 1956-2005, forests increased by 1,857 ths. ha or 20.8 %. The gross reserve of timber grew 2.4 times, and reached 1,736.0 mn cu.m. Ukrainian forests have a large environmental and social importance, which has been confirmed by the country’s legislation. Wood cutting is restricted by its annual gain. Forests are state property.

Change of forest area of Ukraine in 1956-2005

In Ukraine, forest stands dominated by finewood occupy 88.6% of wood covered area. Of them, pine accounts for 33.6% (Pinus silvestris L leading the way), oak – 24.4% (Quercus robur L dominates), and beech (Fagus silvatika L) – 7.4%. Class 2 (commercial) exploitation woods make up 40.7% of wood covered territory.

Ukraine has been recently increasing timber stock, mostly as a result of changes in the age of its woods and the growing portion of mature forests. The tendency will be preserved over the next 30-50 years.

The largest timber stocks are provided by enterprises of the State Forestry Committee of Ukraine (some 12 mn cu.m, including 5.6 mn cu.m, or 86% of main use cutting).

The country began certifying its woods and timber articles. In 2000, the country’s first Ukrainian Certification Group was organized as an FSC scheme. The area of certified woods reached 203 ths. ha of woods, and every year around 360 ths. cu. m. of timber products are certified. Certification of woods by the same FSC scheme is coming to an end in Zakarpatye region. In 2004, with support from WWF alliance and the World Bank, as well as consulting aid from GFA Terra Systems independent consulting company, national standards of forest certification were developed in Ukraine.

In 2005, the first timber auctions were organized at the regional level.

Wood (wood working and pulp-and-paper) industry. In the 1990s the industry suffered a deep crisis caused by the reforming of the state administration (Ministry of Wood Industry of Ukraine), ownership changes, lost supplies of cheap timber and traditional sales markets, skyrocketing prices for energy resources and inflation, as well as a lack of necessary investments. The wood industry’s share in gross industrial GDP of the country slashed from 2.9% in 1990 to 1.7% in 1998, but later went up, to 2.4% in 2000. The industry’s machinery was outdated and depreciated long ago. The wood chemical industry went bankrupt and ceased to exist.

In 2000-2004, production of goods and services grew from USD 464.1 to 1,162.8 mn, or 2.5 times. Production rise was one of the highest among industrial segments (123-156% per annum). Sources of financial support included domestic and foreign investments as well as export revenues.

The key manufacturing types are the production of paper and cardboard articles (44% of the entire output), production of plywood, plates, panels, and veneer (19%), and production of pulp, paper, and cardboard (14%).

The industry’s major enterprises are located in Mukachevo, Kiev (saw and planing production; wood impregnation), Kostopol, Nadvornaya, Kiev (production of plywood, plates, panels, and veneer), in Kiev, Lvov, and Kharkov (production of wooden building structures and millworks), in Kiev and Dnepropetrovsk (manufacturing of wooden containers), in Mukachevo, Kiev, and Lvov (production of other timber and cork articles, straw and plating materials), in Obukhov and Zhidachev (production of pulp, paper, and cardboard), in Rubezhnoye, Koryukovka, Dnepropetrovsk, and Kiev (manufacturing of paper and cardboard articles).

The largest volumes of timber production are attributed to Kiev region (including the city of Kiev), Lvov, and Zakarpatye regions.

The number of wood-working enterprises grew from 3.6 ths. (in 2001) to 4.2 ths. (in 2004), mostly due to small firms involved in timber sawing. Corporate (including joint stock companies) and private ownership are the dominating forms, but joint ventures are also arising. One of the key tasks in the industry is to pick up the volumes of timber deep processing.

The largest decline in production volumes was reported by furniture manufacturing. It is one of the most complicated production types, and its recovery demands sizable financial investments.

Foreign trade

Wood ranks fourth among natural resources following oil, gas, and coal in Ukraine. The disparity of prices for timber and articles on domestic and foreign markets drew special attention to export supplies of timber articles. Since independence, Ukraine has turned from an importer into exporter of timber and products.

Most of exported commodities were wood-working output – timber and timber articles. Higher financial volumes were mostly caused by the physical increase of export supplies, rather than by higher prices because of deeper processing.

The irrational structure of timber exports is explained by the lack of cash to buy state-of-the-art equipment for deep processing of wood.

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