Forestry as an investment 2014

The real investment return in wood production in private forests amounted to 2.3 per cent in 2014. The return was 1.4 percentage points higher than the average for the five preceding years, but it still remained 1.3 percentage points below the 10-year average.
Considering the income components, income from wood sales increased the return by 3.5 percentage points, the value of net growth of growing stock by 1.3 percentage points, and state subsidies for wood production by 0.1 percentage points. The drop in real stumpage prices reduced the earnings by 2.0 percentage points and the cost of wood production by 0.6 percentage points.
Compared to the five preceding years, the fact that the real change in stumpage prices in 2014 was less negative than during the previous five-year period (–3.2%) increased the returns. The share of stumpage earnings was also higher (+0.4 percentage points), so a higher share of earnings was gained as actual income.
By regional district of the National Forestry Centre, the returns were the highest in the districts of Lapland (+4.6%), North Ostrobothnia (+3.9%), and Central Finland (+3.6%). In the calculation, the stumpage price value is used as the capital value, which is considerably lower per hectare in Northern Finland than in Southern Finland, which means that the return in relation to capital becomes high even with lower revenue and appreciation. The special feature of Northern Finland is that the biggest share of the return comes from the value of the net growth of stock, which in Lapland is 3.6 per cent and in North Ostrobothnia 3.0 per cent.

Investment return in wood production (deflated using the cost-living index)

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