Without question, the Baltic states of Estonia, Latvia, and Lithuania could be aptly termed the 'domains of the woods'. The connection between the people and the woodland, both economically and culturally, is profound. Wood is not merely a utilitarian material in this region, employed for heating and construction as well as the manufacture of furniture and other domestic items, it is woven into the fabric of life in the region.
Currently, the forest sector, alongside its associated wood processing industry, stands as a key player in the regional economy. The Baltic region, although covering a mere 4.1% of EU's territory, proudly houses 6.6% of the EU's commercial forest stock. The forest culture of the Baltics, akin to its Nordic and Central European counterparts, offers a gamut of recreational activities, including hunting, sports, and foraging. The Baltic forests are also home to numerous unique ecosystems of immense value on a global scale.
However, the value of these forests extends beyond their mere existence. These forests have transformed into 'green gold' due to the wise utilisation and conservation practices adopted by the Baltic nations. This includes protecting natural resources, promoting national growth, and contributing to societal welfare.
The forest sector in the Baltic States encompasses a broad range of activities - from forestry and logging to timber production, woodworking, and even furniture production.
Estonia's forests, covering half of the country's land area, rank sixth in Europe for forest coverage. The total growing stock in 2022 stood at a remarkable 496 million m3. Estonia has seen a boom in its timber industry, with approximately 1,000 companies engaged in wood processing and wood product manufacturing. The production volumes are at an all-time high, and exports account for almost two-thirds of sales in the timber industry.
Latvia, with its forests occupying 52% of the national territory, stands as the fourth most forested country in Europe. The forestry and wood processing subsector recorded a net turnover of 992 million euros in 2021, while the manufacture of timber and wood products saw a net turnover of 2,302 million euros.
Lithuania, with 33.3% of its total land area forested, had a gross felling of 7.7 million m3 in 2022. The Lithuanian furniture and paper industries have seen rapid development within the wood industry sector, despite the lack of comprehensive statistical data.
In the grand scheme of things, the Baltic States contribute 0.6% to the EU GDP. However, they generate 4.1% of the value-added in the EU woodworking sector. There is a considerable margin of growth in the Baltic Forest and wood industry, which could be bolstered by foreign investments and an orientation towards value-added services in the sector.
The potential of the Baltic Forest and wood industry is enormous. As such, it provides a fertile ground for cooperation and growth for entrepreneurs and investors alike. With sound management practices and a focus on high-value production, the industry is poised for an exciting and sustainable future.
Estonia
Estonia is prominently known for its vast woodlands, with nearly 89% of its forests open for timber extraction. The country reported an impressive annual logging volume of 12 million m3 in 2022, predominantly consisting of coniferous woods such as pine and spruce (60%), while deciduous species like birch made up the remaining 40%.
In terms of economic value, the Estonian forest industry generated a net turnover of 3.2 billion Euros, a record high within the NACE C16 and C31 classifications. The industry hosts about a thousand enterprises engaged in timber processing and manufacturing, creating an expansive network that stands on deep-rooted traditions, particularly within the furniture sector, which is home to over 475 companies.
Estonia's wood sector has experienced substantial growth over the past five years (2017 - 2022), with production levels escalating by 34%. This expansion stands in stark contrast to the European Union's overall trajectory, which saw a 4.5% decrease. The rise in production can be primarily attributed to surges in export volumes for specific sub-sectors such as wooden pellets (32%), pre-fabricated timber houses (21%), and plywood/OSB board (19%).
Exports play a significant role in the Estonian timber industry, accounting for nearly two-thirds of total sales. As per the Estonian Statistical Office's data, wood industry exports in 2022 amounted to 2.25 billion euros. Sawn and planned wood topped the export list at 413 million Euros, followed by wooden buildings, furniture, construction details, pellets, round wood, pulp, unbleached paper, among other items.
Scandinavian countries, neighbouring Latvia, and major EU timber importers like Germany and the United Kingdom constitute the key export destinations. Additionally, Estonian products find their way to markets in Japan and South Korea. The primary exported product categories encompass seats, furniture parts, dining and living room furniture, wooden kitchen furniture, wooden bedroom furniture, and various other furniture items.
Estonia's construction industry boasts more than 8,400 wood construction enterprises, the majority (80%) of which are micro-enterprises with fewer than 10 employees. The industry mainly serves domestic markets but has increasingly adopted new technologies and pivoted towards high-value production. These advancements are visible in the wood house production sector (with high-tech acoustic wood sheets employed in numerous storage wood houses) and the ship industry (where liquid natural gas containers are employed).
Estonia leads the European market in exporting wood houses, with the export value of wooden building construction materials exceeding 350 million euros in 2022. Estonia is also the second-largest European producer and exporter of energy pellets and holds the fourth position globally.
Forests and wood industries have a significant impact on the country's economy, constituting approximately 5% of the country's GDP and 22% of the manufacturing GDP in 2021. By 2021, the wood products trade balance had achieved a positive status, reaching 1,428 million Euros.
Latvia
Approximately 87% of Latvia's extensive forest cover of around 3.4 million hectares is made available for timber extraction. The country's annual timber harvest volumes have maintained stability over the years, consistently falling between 10 and 12 million cubic meters. The forest industry in Latvia comprises over 3,000 companies, although less than 900 companies report an annual turnover exceeding 150,000 Euros.
The manufacturing sector for timber and wood products in Latvia generates a substantial net turnover of 2,302 million Euros, with profits amounting to 132 million Euros. The forestry and wood processing sub-sector contribute another 992 million Euros in net turnover, 104 million of which is profit. Meanwhile, the furniture sector, although generating a turnover of 276 million Euros, yields a comparatively lower profit margin of 4-5%.
Latvia has made notable strides in its export rankings worldwide and in Europe. It is the third largest global exporter and second in Europe for OSB production. For energy pellet production, Latvia sits atop Europe and is third globally. In the context of birch plywood production, Latvia secures the second spot in Europe and fourth place worldwide.
However, an interesting dynamic has emerged in recent years, particularly within the conifers' segment. Despite harvesting volumes remaining relatively unchanged since 2003, the consumption of round wood has risen by 25%, and by 2019, the import of conifer sawn wood surpassed its export by 420,000 cubic meters. This has transformed Latvia's status from being a net exporter to a net importer.
The export value of forest products, woodworking, and furniture comprises roughly 20% of Latvia's overall exports, totalling approximately 2 billion Euros. In 2021, the country exported wooden building construction materials worth 79 million Euros. Moreover, Latvian softwood sawmilling has gained international recognition, ranking 9th worldwide and 5th in Europe for softwood exports.
The contribution of forests and the wood industry to Latvia's economy is significant, with these sectors accounting for 5% of the country's GDP and 24% of the manufacturing GDP in 2022.
Lithuania
Approximately 88% of Lithuania's extensive forest cover, which totals around 2.2 million hectares, is accessible for timber harvesting. In 2022, gross felling was reported at 7.7 million cubic meters. Timber companies are distributed across Lithuania, with a notable concentration in smaller towns and villages. The forest and wood processing sector in Lithuania boasted over 2,000 operating companies as of 2021.
Reliable and current statistics on Lithuania's wood manufacturing sector are somewhat scarce. The industry tends not to publicly share information or advertise its potential and opportunities. The available public data is often outdated, offering an incomplete view of the current market situation. However, it's known that the furniture and paper industries are the fastest growing segments within the wood industry.
The forest and wood processing sector contributes approximately 4.5% to Lithuania's total national value added, with forestry contributing about 0.6%. The furniture industry generates the largest share of value added in the sector, contributing about 2%. Interestingly, while the number of companies in forestry, logging, and the forest industry has declined over recent years, their average size has increased.
The furniture and wood processing industries account for over 30% of jobs in Lithuania's entire manufacturing sector. In recent years, the furniture industry has expanded significantly due largely to foreign investments. In 2021, furniture exports from Lithuania reached EUR 1.823 million, marking a 12 percent increase from 2020. Furniture imports amounted to EUR 1.408 million, a 6 percent increase from 2019. Furthermore, production of sawn wood was reported at about 1.1 million cubic meters in 2021. On the global stage, Lithuania's furniture industry ranks 13th in the world and 8th in Europe in terms of exports.
Lithuania exports about 20 percent of its wood resources. However, a large portion of this wood is unprocessed, limiting the sector's income potential. A shift towards a more value-added orientation could greatly benefit the wood industry. The growth witnessed in Lithuania's furniture industry and the significant potential for increasing processed sawn wood and wood products suggest promising opportunities for cooperation. Furthermore, exports of wooden building construction materials in 2022 were up by 12% from the previous year in Lithuania.
