Forest owners’ leaders in agreement: Challenges to forest use are no longer economic but political

9.9.2021 / Article
Young spruces. Photo: Anna Kauppi
Sustainable forest management is the keyword. Photo: Anna Kauppi

Juha Hakkarainen and Marko Mäki-Hakola consider that the challenge to forest use created by the EU’s forest policy is many times greater than the previously seen environmental ones. The previous and current Forest Directors of the Finnish farmers’ and forest owners’ union, the MTK, are of the opinion that in terms of economics, the forest sector has a strong and sustainable future.

Juha Hakkarainen compares the current situation of the forest sector to the financial crisis of 2008.

’A great deal of that crisis was just an illusion. The difficulties mainly concerned printing and office papers, but the crisis was seen as affecting the entire sector,’ says Hakkarainen.

It was thought that the forest industry would never again have the kind of large volume product of high added value like office paper. By now, the outlook is different.

’The market outlook for the industry is good, and so is its competitivity. The financial result has been good for a long time, and the first half of 2021 is exceptionally good,’ says Hakkarainen.

The bulk product to replace office paper is also just round the corner. Researchers consider wood-based textiles to be even more valuable than office paper, both as regards added value and volume.

’I also believe that the financial outlook will stay the same. All important megatrends point to a steady demand for sustainably produced, renewable and recyclable raw materials,’ says Hakkarainen.

Marko Mäki-Hakola. Photo: Anna Kauppi
’The debate should deal with larger entities and bear in mind all aspects of sustainability, both social, economic and ecological,’ Mäki-Hakola says. Photo: Anna Kauppi

MTK is one of the best-known forest organizations in Europe

What Hakkarainen and Mäki-Hakola say about things is interesting because they are able to shed light on the change taking place in the Finnish and European forest sectors. The Central Union of Agricultural Producers and Forest Owners MTK is one of the best-known forest organizations in Europe, and people are accustomed to listening to what it says.

Hakkarainen started as the Forest Director at MTK in 2009 and moved on to become the Managing Director of Finsilva plc in August 2021. Finsilva is active in forest management and land development, and it owns 130,000 hectares of forest in southern and central Finland.

Mäki-Hakola started as Forest Director of MTK in July 2021. Both have held a number of positions with in MTK before this.

Juha Hakkarainen. Photo: Anna Kauppi
’Sustainable forest management is the keyword, but it means different things in the cork oak forests of southern Europe and in our spruce stands,’ says Hakkarainen. Photo: Anna Kauppi

Instead of customers, it is politicians that now pose challenges

Mäki-Hakola agrees with Hakkarainen’s views on the financial outlook of the forest sector. As to environmental challenges, their opinions differ slightly.

During the forest conflict in Upper Lapland in the early 2000s, for example, demands were voiced by the Central European customers of the forest industry, and what they said concerned forests owned by the state.

’Now, demands are voiced by the political decision-makers in both the European Union and Finland, concerning all forests regardless of their ownership. The greatest change is that the Commission now calls into question the entire system of forest management in the Nordic countries, not just single felling operations or methods of felling,’ says Hakkarainen.

In the Upper Lapland conflict information was channelled by international environmental organizations. They spoke about Finland to the forest industry customers and conveyed their understanding of the customers’ demands to the forest industry operating in Finland and to the government of Finland as a forest owner.

Mäki-Hakola considers that even now, the ENGOs are playing a part, but this time they are focusing more on lobbying the politicians and participating in public debate.

Forest management in Finland is particularly sensitive to this type of influence, being dependent on export trade. Hakkarainen says that in almost all other countries of the world, forest industry only operates on the domestic market, and it is a known fact that in every country, people tend to consider their ‘own’ forest sector to be the best.

Forest issues are poorly understood

At the time of the Upper Lapland conflict, the customers were familiar with Finnish forest management and had no quarrel with it. What they did not want was a conflict with the ENGOs.

Now that the criticism comes from the politicians, it is directed against forest management and is often based on a fairly low level of informedness.

Mäki-Hakola assesses the European Union Commission’s attitude to forest management on the basis of the draft forest strategy that leaked out in June. He sees it more or less based on a certain ideology, in that it prioritizes the environment above all else.

’I’m sure everyone wants to improve things. However, for quite a number of EU decision-makers, the commercial use of forests is not something they consider an important issue,’ says Mäki-Hakola.

’Many of the EU decision-makers come from countries with few forests. We all consider the use of forests according to our own background. Yet good intentions and not much information is often a destructive combination,’ says Mäki-Hakola.

Log stack. Photo: Erkki Oksanen
In almost all countries of the world, forest industry only operates on the domestic market. Photo: Erkki Oksanen

If decision-makers know little about forest management and use, the conclusion must also be that the forest sector has not succeeded in its communication. Both Hakkarainen and Mäki-Hakola stress that efforts to communicate the significance of the sector must be intensified.

Communication in itself is, however, not enough. ’The forest sector has invested a great deal in ecological sustainability, but that doesn’t mean there isn’t a great deal more to be done across the whole sector,’ says Hakkarainen.

Tough words about ideological basis

Saying that the Commission’s attitude towards the use of forests is based on a certain ideology is pretty radical and requires justification. Mäki-Hakola says that the impact of an ideology could be seen in the course of the Commission’s work on the forest strategy.

’At the start, the work was open and many bodies participated in it. But the opinions of other EU institutions, above all those of the European Parliament, turned out to be different from the Commission’s,’ Mäki-Hakola says.

However, the Commission continued the preparation on its own and under complete silence. The draft that leaked out in June was completely different from what was required by the Parliament, for one.’

’The draft placed the environment above everything else, which does not promote sustainable development as a whole,’ says Mäki-Hakola.

The claim about the role of an ideology is tough also because people are not accustomed to make compromises in matters of ideology.

’There are signs that if the Commission can’t get what it wants about something, it will bring it up in some other context. If this should happen, we must only hope that the member states will stand their ground,’ Mäki-Hakola says.

Unexpected protests from forested eastern Member States

The draft forest strategy that leaked out in June caused loud protests. In Finland, this was labelled as opposition to environmental and climate goals. The Finnish forest sector was accused of massive lobbying which succeeded in causing the Commission to shift its ground.

Those looking after the forest sector’s interests in other Nordic countries were understandably also alerted, but it was the forested eastern Member States that gave a surprise to the MTK, too.

’They sent out a very strong message that they had thought the Union would safeguard the right of private ownership and free entrepreneurship in place of the former command economy. The draft forest strategy was like a slap in the face of these ideas,’ say Mäki-Hakola.

In other parts of the EU, too, right of ownership is at the core of forest ownership. That the matter was so strongly protested against by the eastern forested Member States was a surprise to MTK, but a happy one.

Highlighting the forest sector’s interests proved successful. When the finalized forest strategy was published, it was an improvement on the draft in several respects.

Forest sector within the EU is now more unified

Changes in the operating environment of the forest sector have had other consequences, too. Hakkarainen remembers how, after the 2008 financial crisis, the industry and forest owners used to argue about one thing after another. Sometimes it was also difficult for the forested countries in the EU to find common ground.

These days, when the interests of the forest sector are at stake, these countries will jointly look for common ground to support the work.

’Way back in the history of the EU there was something called the subsidiarity principle. It meant that all decisions were to be taken as close to ordinary people as possible, and upper-level decisions would only be made when necessary,’ Hakkarainen says.

This is also the key to why the forest sector in the EU has succeeded in looking after its interests jointly.

’Sustainable forest management is the keyword, but it means different things in the cork oak forests of southern Europe and in our spruce stands,’ says Hakkarainen.

Another thing that has made the forest sector more unified are the many projects of the EU: sustainable funding; the biodiversity and forest strategy; REDD+, which, among other things, prevents forest destruction; the Fit for 55 programme; and LULUCF, which focuses on land use.

’All these have intensified the cooperation between both forested countries and sectors of industry,’ says Hakkarainen.

Climate would not benefit from felling restrictions

Hakkarainen finds it good that environmental issues related to forests are discussed, but he does not like the black-and-white nature of this. He cites the example of wanting to protect forests in order to decrease fellings in Europe in order to increase the carbon storage in forests.

This would have little impact on climate. According to a study led by Maarit I. Kallio, fellings would simply be moved elsewhere, mainly to South and North America and Russia, where forests may be used a great deal less sparingly than in Europe.

’This would help the climate if global consumption and demand also decreased at the same time, but this could only happen in a dream world,’ says Hakkarainen.

Reality looks reciprocal: according to a study by consulting company Afry, ordered by Finnish Forest Industries Federation, the global market of forest industry products increases to EUR 715 thousand million in 2035, from the present EUR 540 thousand million.

On the other hand, the forest sector is among the few that are generating solutions to combat climate change. ’We should use forests to replace fossil raw materials. We could use methods of forest management to ensure that forests continue to grow, for then the carbon sink in forests would be as large as possible,’ says Hakkarainen.

All this requires investments in industry and forest management but restricting fellings would be like poison to investment activity.

’We’d have no product development, no new products to replace fossil-based ones. Investments to refurbish facilities would cease completely, and profitability would be lost. And I believe this is likely to be the true goal behind the proposals to restrict fellings,’ says Hakkarainen.

In fact, Europe would lose a flourishing and climate-friendly sector of industry without any real benefit to the climate.

Forest debate should focus on larger entities

In its latest report ’Course correction’, the Finnish Innovation Fund Sitra examines also the latter half of this century, a time during which the Paris climate agreement says that we should strive for carbon negativity. Climate debate on forests has rarely touched on anything this far off in the future.

Carbon negativity is not possible without carbon sinks, which are found in agriculture and in forests. If forests are protected, however, their growth and carbon sinks will quickly deteriorate.

Moreover, there is no certainty that carbon storages in unmanaged forests will remain intact.

’The insect damage in Central European forests and the wildfires seen in many places have taught us that carbon storages in forests may vanish into thin air at any time,’ says Hakkarainen.

Mäki-Hakola calls for a more constructive debate on forests.

’The debate should deal with larger entities and bear in mind all aspects of sustainability, both social, economic and ecological,’ Mäki-Hakola says.

Focusing on just one dimension is a form of free-loading, in Mäki-Hakola’s opinion.

’Doing that is easy, but it doesn’t generate solutions. We need to safeguard all dimensions of sustainability, otherwise none of them can become a reality,’ says Mäki-Hakola.

Who?

Juha Hakkarainen

  • Managing Director of Finsilva plc as of 1 August 2021
  • Previously employed at MTK, most recently as Forest Director and prior to that as Research Manager and Forest Economist; before that several forest sector and university positions
  • Holds a Licentiate in Agriculture and Forestry, majoring in forest management planning and economy, other studies include business and national economics
  • Numerous positions of trust, leisure interests include physical exercise, hunting and fishing, Lake Saimaa and cooking

Marko Mäki-Hakola

  • Forest Director of MTK as of 1 July 2021
  • Previously employed as MTK’s Director of Business Development, as Director and Research Manager of Western Finland forest owners’ union, and as researcher at Pellervo Economic Research PTT
  • Holds Master’s degrees in biology and social sciences (economics)
  • Leisure activities: endurance sports, spending time outdoors and basketball (team leader)

Central Union of Agricultural Producers and Forest Owners MTK

  • Interest organization representing farmers, forest owners and rural entrepreneurs in Finland
  • Membership of local associations consists of 114,000 farmers and 42,700 farms
  • Membership of local associations consists of 202,000 forest owners
  • Sister organisation Central Union of Swedish-speaking Agricultural Producers in Finland (SLC) has a membership of 10,600 farmers and 19,000 forest owners

Finsilva plc

  • One of the largest forest owners in Finland, owning 130,000 hectares of forest
  • Main business areas: forest management and land development
  • Owned by the Dasos forest fund, Metsäliitto Cooperative, Metsärahasto II Ky (pension company Ilmarinen) and MTK

 

Hannes Mäntyranta

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