Great optimism among Swedish forest owners

November 19, 2009 by timbercommunity

Timber prices begin to rise gradually

The forest industry is one of the main export industries in Sweden. Subcontractors, or their owners, are now very optimistic about the future. The annual Forest Survey (skogsbarometern), conducted by research specialist Sifo on behalf of the consulting firm LRF Konsult and Swedbank, shows that a large majority believes in increased prices for raw materials, improved profitability and rising prices for their forest properties.

The private forest owners deliver 60 percent of the raw material to the industry and their assessment of the market forward is therefore of great importance. The forest owners believe that the prices of timber will rise in the future - three-quarters believe in increasing prices within a year and 80 percent on increased prices over the next three years. The same optimism is the price of pulpwood.

The prices of timber
Owners strongly believe in a brighter future but the next time they are planning to fell less.
- The prices of timber have fallen during the year and is now at levels seen 10 years ago. In autumn, however, prices started to rise again. Now is the expectation of rising prices and higher profitability very high. It is encouraging, with positive signals in times of financial crisis and recession. Worryingly for the industry is that the desire to fell a clear downward trend, "says John Roos, head of marketing at LRF Konsult Forest Office. Large values will change hands next few years

Prices of forest land has risen sharply
The interest in the ownership of forest remains high - almost 60% would invest in more forest land if they had one million SEK, while 25% would invest in stocks or mutual funds. The average age of the owners is increasing and one third of owners are now retired.
Many owners are older and therefore expected number of transfers during the next few years.
- More land will be generational shift or sell their property in the future. Within a five-year period, we expect the forest values for 80 billion SEK will change hands. The survey shows that a significantly larger proportion of these will be sold on the open market than before. We also note that debt levels are low, 60 percent have no loans at all in their forest, says Wennberg, manager of Agriculture and Forestry deparment at Swedbank.

Rising prices of forest land
Prices of forest land has increased markedly during the 2000s. In the first half of 2009, however, prices fell by an average of three per cent of the country. A large majority of those who buy forest land is already owners, and despite the high prices do almost 70 percent on rising prices in the coming years. A majority also believe that it remains profitable to buy the forest to the current high price levels. What matters most in forest ownership and for those who buy the very sense of ownership of forest and that it is a good and long-term investment. Interest in new business opportunities in the form of wind power and energy has decreased but remains high.

Forest Survey is an annual report on the economic situation among Swedish private forest owners and their expectations. The report, prepared by Swedbank and LRF Konsult by SIFO, based on a survey among 657 forest owners.

Pressrelease

Read the full report here (in Swedish)