Forestry as an investment 2024

The real return on investment in wood production in non-industrial private forestry increased in 2024. The return was boosted by the rise in wood prices, which has a large impact on the return index calculated by the Natural Resources Institute Finland (Luke). Returns excluding the change in stumpage prices were 4.1%.

• The return on investment in non-industrial private forestry calculated by Luke is divided into components for which the return is calculated in relation to the stumpage price value. Earnings from wood sales accounted for +3.4, wood production subsidies for +0.1 and the value of net increment of the growing stock for +1.0 percentage points of returns. In contrast, total wood production costs reduced returns by 0.4 percentage points. The increase in the stumpage price level increased the felling value of private forests used as capital value, affecting the total return by +10,8 percentage points.
• Based on earnings from wood sales, wood production costs, and changes in the  value of net increment of the growing stock, the return was 4.1% in 2024. The return calculated on the basis of these factors has varied between 4.1 and 4.7 percentage points over the past ten years.
• When all components of the return index are added together, the real return on investment in wood production in non-industrial private forestry was 14.9 percent in 2024. The return was four percentage points higher than in the previous year, which can be explained by the significant increase in stumpage prices from the previous year.
• In the whole country, the impact of the net increment of the growing stock had an impact of 1% on returns. This means that the value of the growing stock was higher than that of removals. The net increment had a negative impact on returns in four regions. In other words, the value of the growing stock was lower than that of removals in the region.
• In the calculation of returns, earnings, expenditure and the value of net increment are proportional to the stumpage value calculated on the basis of the volume of standing trees and stumpage prices. In 2024, the stumpage value increased to EUR 80 billion.

Background information about the statistics

Return on investment in wood production published in the statistics on forestry as an investment is a return index calculated on the basis of felling, standing sales prices, state forestry subsidies, wood production expenditure and growing stock data. The calculation relates income and costs to the stumpage value of the stand, calculated based on the volume of trees and standing sale prices. The return calculation is presented in the publication of Markku Penttinen and Andrei Lausti (Penttinen, M. & Lausti, A. 2004. The competitiveness and return components of NIPF ownership in Finland. The Finnish Journal of Business Economics 53(2): 135, 143–156).

The data are based on Luke’s statistics and data on the growing stock in forest land for wood production in the National Forest Inventory (NFI). Results based on NFI measurements conducted for 2019–2023 were used in the growing stock calculations for 2020–2024. In the statistics, data on the most recent three years are preliminary, as new inventory data are used to specify the growing stock data in the calculation. Changes in the monetary value are based on the cost-of-living index (1951:10=100).

Luke's return calculation does not reflect the return on forest property investment, because in the calculation, the value of forest assets is determined as the stumpage value (felling value) based on stumpage prices and timber assortment volumes, which only takes stumpage prices into account when considering changes in the forest property market.