Latvia’s exports: at the top of the tree

Latvia’s exports: at the top of the tree

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A forest is much more than a collection of trees. It is an ongoing dynamic system that lives, breathes, grows but, ultimately, is also capable of dying. Woodlands are one of the most important natural resources on earth, they are something people can see, smell, touch and use every day. Latvia can be proud that this resource covers almost 3 million hectares, or 42 percent, of its total land area, making the country the fourth most-forested country in Europe. As trees grow much slower in Latvia than in Western Europe, on average, they for the most part are of better commercial quality than, for instance, Scottish or Italian trees, and face sustained demand on the international timber market. Leading to believe that Latvia’s national treasure is not just the wood that grows in its forests, but what has evolved with it – the people, companies, technologies, knowledge and experience gained over the course of many decades to offer high quality wood products.

The wood industry in Latvia has always been focused on exports and has become one of the most important export sectors of the country. One of the biggest timber industry’s long-term goals is to transform the old-style forest sector into a technologically advanced industry. Nowadays, the forestry industry in Latvia works as an innovative sector operating to the highest global standards, utilizing production processes with modern, environmentally friendly technologies and implementing effective resource-management policies. This development course gives a platform not only for businesses, but for the whole country’s economic and social growth.

Woodlands are essential for the Latvia’s industry, contributing significantly in the GDP composition and accounting for a large portion of exports. The wood industry is an important branch of the processing sector and has long-standing traditions in the country. Since the restoration of Latvian independence, the forestry and wood industry has been a key sector of the Latvian economy. Today, the industry contributes more than 27 % of the total value-added in manufacturing. Of all the manufacturers registered in Latvia, more than 27 % are linked to the forestry sector, which employs around one-fifth of the manufacturing labor force of the country.

Forests are Latvia’s national treasure. They allowed the country to develop a successful industry. Local companies manufacture wood products ranging from doors to fine furniture, from handcrafted chess boards to unique wooden clocks, and from charcoal to plywood. A large portion of these products are exported, nevertheless the domestic consumer also buys the Latvian-made wood products as well. On average, exports of the wood industry products constitutes about one fourth of the country’s total export volumes. Although the production of softwood dominates the industry, there is a significant amount of value-added production taking place in Latvia. Two thirds of industry output consists of value-added items, while one fourth is pulpwood and firewood. As it was said before, Latvian exports every year a large amount of timber, boards, furniture and other domestically produced wood items, and this tendency is forecast to increase going forward.

Image courtesy of yassan-yukky at Flickr.com
Image courtesy of yassan-yukky at Flickr.com

In 2015 Latvian wooden furniture exports grew 2.85% to EUR 128.01 million. According to the Baltic Course, which compiled data of the Forest Department of the Latvian Agriculture Ministry, Latvia’s wooden furniture have a share now of 6.2% of the country’s total forest industry exports. The country’s main destination for its wooden furniture is Germany (18.9% share of the total exports), where exports in 2015 were worth EUR 24 million. Denmark was the second destination with EUR 17 million and the UK with EUR 11 million worth of furniture, with a share of 13.7% and 9.37% of Latvia’s total furniture exports respectively.

Currently, the ongoing economic crisis has significantly reduced the purchasing capacity of the Baltic shoppers. This situation works as an opportunity for Latvia, as it gives the chance to buy high-quality Latvian furniture at a fraction of European prices. Customer preferences were changes dramatically by financial hardships. This might ultimately translate into an increased demand for domestically-produced items. If during the years of economic abundance 67 percent of Baltic shoppers were willing to buy the ‘status’ furniture that they classified as ‘expensive,’ then now, up to 75 percent of the customers will choose ‘quality at a reasonable price.’

As wood and timber businesses can have a number of adverse environmental impacts, including noise pollution, air emissions and land contamination, Latvian businesses should be thinking about making significant investments to ensure the safe and efficient utilization of the forest resources. Only the companies committed to educate their employees on the importance of environmentally safe manufacturing technologies can ensure the sustainability of the country’s forest resources. Taking care of the land, making the best use out of it and ensuring the reforestations of it, may secure a prominent future for Latvia.

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