Quality description of Operating profit in non-industrial private forestry statistics

Compiler: Natural Resources Institute Finland (Luke), starting from 1 January 2015. The statistics were previously compiled by the Finnish Forest Research Institute (Metla).

Basis for compilation: The statistics are compiled pursuant to the Act on the Natural Resources Institute Finland (561/2014), the Act on Food and Natural Resource Statistics (562/2014) and the Statistics Act (280/2004).

Funding for the statistics: Funding for the statistics is provided from Luke’s assets.

1. Relevance of statistical data

1.1 Data content and purpose of use

Operating profit in non-industrial private forestry is based on a profit margin calculation, where wood production expenses are deducted from income. Some information is also calculated relative to the forest area. Calculations are made on the basis of regional income and expense statistics and primarily estimated administrative and other expenses. Regional operating profit is reported according to the place of origin of income.

The statistics are used, for example, to support decision-making concerning the bioeconomy, in the drafting and monitoring of the National Forest Strategy and regional forest programmes, to monitor sustainable forestry criteria and indicators and forest certifications, and as a data source for research, planning and forecasting.

1.2 Concepts and classifications

Non-industrial private forests include ordinary non-industrial private forest owners (natural persons, estates of deceased persons and enterprises), as well as jointly owned forests and forests owned by municipalities, parishes, foundations and other similar communities or enterprises outside the wood production industry. Until 2008, “non-industrial private forests” also included the state-owned forests that were not managed by Metsähallitus.

Operating profit is calculated by deducting operating expenses from operating income. Operating profit is one of the indicators of absolute profitability.

Regions included the 13 districts of public services of the Finnish Forest Centre and the region of Åland between 1990 and 2014, and since 2015, the term has referred to the regions (19) of Finland.

Income includes gross stumpage earnings and government subsidies for wood production and energywood harvesting in non-industrial private forests.

Expenses come from investments in wood production (silviculture and forest improvement investments) and administrative and other expenses. The value of work carried out by forest owners is included in expenses. Investments are usually directed at individual forest patterns. Administrative and other expenses cover farms in their entirety.

Forest land area is based on the area of forest land allocated to wood production in the National Forest Inventory (VMI) per the Finnish Forest Centre’s regions, and since 2015, per the regions of Finland.

1.3 Data sources

Information about income is based on the statistics of Stumpage earnings published by the Natural Resources Institute Finland (Luke) and the statistics of the use of state subsidies in non-industrial private forestry published by the Finnish Forest Centre. Investment costs in wood production are based on Luke’s statistics of Silvicultural and forest improvement work.

Administrative and other expenses are mainly based on estimates. Until 2014, information about forestry fees was obtained from the Central Union of Agricultural Producers and Forest Owners. Since 2015, information about forest management associations’ membership fees has only been obtained at a national level.

1.4 Users’ points of view

Feedback from users is monitored and taken into account when developing the statistics.

2. Accuracy and reliability of data

2.1 Research methodology

Operating profit in non-industrial private forestry is calculated by deducting investments in wood production and administrative and other expenses from wood production income. Income also includes government subsidies for wood production and energywood harvesting in non-industrial private forests. Between 2008 and 2014, subsidies for energywood harvesting were recorded separately from subsidies for young forest tending. Then, these subsidies were calculated as direct income alongside stumpage earnings.

In 2015, data collection practices for the statistics of Silvicultural and forest improvement work were changed and the sample size was expanded. As a result, the performance and value of work carried out by forest owners, based on estimates presented by forest management associations, were no longer included in the official statistics. For calculating the operating profit in non-industrial private forestry, multipliers were calculated for forest regeneration, young forest tending and forest fertilisation on the basis of workloads, work type-specific total expenses and forest land areas per the Finnish Forest Centre’s regions valid in 2014, using which the value of independent work carried out by forest owners was added to the aforementioned work types per region. In 2018, the value of independent work was approximately EUR 41 million.

Administrative and other expenses include part of expenses included in the average deduction of area-specific taxes. These include:

Forest management associations’ membership fees. Until 2014, information about forestry fees was obtained from the Central Union of Agricultural Producers and Forest Owners per forest management association. This information was changed to be based on the Finnish Forest Centre’s regions on the basis of forest land areas in non-industrial private forests. Since 2015, information about forest management associations’ membership fees has only been obtained at a national level. The total amount has been distributed between regions on the basis of the 2014 forestry fees per forest management association and forest land areas. This information is confidential and cannot be published separately. Forest management associations’ membership fees comprise the largest item in administrative and other expenses.
Forest road maintenance expenses. Expenses are based on Piiparinen’s (2003) publication “Metsäteiden kunnossapitokustannukset Etelä-Suomen yksityismetsissä” (Forest road maintenance expenses in private forests in Southern Finland) and the length of forest roads built since 1965. These expenses are updated using the earth construction management and maintenance index.
Fees paid for other professional assistance. The most recent statistics of the amount of professional assistance are from 2011 (annual statistics 2011 of Forest Development Centre Tapio). Expenses incurred by forest owners from forest plans and other professional assistance have been estimated on the basis of these amounts. After this, the expenses have been adjusted with the income level index (2018 income level index, monthly salary, agriculture and forestry).
General administrative expenses from non-industrial private forest (e.g. telephone, conferencing, mailing and other similar expenses). No statistics are available. These expenses are calculated in the same way as the average deduction of forest land area taxes in 2005: the amount of industrial wood felled from non-industrial private forests multiplied by EUR 0.17.
Administrative expenses from forests owned by municipalities and parishes and from other private forests. No statistics are available. Originally, expenses used in the average deduction of forest land area taxes have been adjusted using multipliers (2018 income level index, municipalities, monthly salary).
Expenses from professional journal subscriptions and the acquisition of professional literature. With regard to journals, expenses are largely based on the distribution of forestry journals, subscription fees and an estimate of the percentage of forest owners from all subscribers. With regard to literature, the expenses are estimates.
Contributions paid to the Finnish Forest Foundation and labour market associations’ membership fees. Expenses are based on an estimate prepared on the basis of information available in the Internet in 2009. These expenses are a small item.

2.2 Factors affecting the reliability of the statistics

The accuracy and reliability of the statistics are presented in the quality descriptions available from the homepage for each statistics.

The reliability of the statistics is reduced by the information about the value of work carried out by forest owners and about administrative and other expenses not being reliable. However, expenses from investments in wood production and administration are low compared with income (16% on average between 1999 and 2018). This means that any inaccuracies do not have any significant impact on operating profit.

2.3 Correction of errors

Any errors identified in the statistics will be corrected as soon as possible, and the corrected information will be published on the homepage of the relevant statistics.

3. Timeliness and promptness of data

Preliminary statistics are published in March. Final statistics are published in September.

4. Coherence and comparability of statistics

The statistical database is comparable over the entire period. Due to the changes made in the calculation of administrative and other expenses in 2015, operating profit is not comparable with information published before 18 June 2015. Due to corrections in areas, hectare-specific information is not comparable with information published before 18 March 2020.

The time series of administrative and other expenses for 1990–2013 was changed in 2015. Estimates of travel expenses accrued from trips between the forest owner’s place of residence and the location of the estate, insurance premiums, course fees and transfer tax on forest estate transactions were excluded from the calculation. Between 2004 and 2013, these expenses were EUR 6.0 per hectare on average. Travel expenses were clearly the highest expense item (EUR 4.6 per hectare).

The hectare-specific results available in the database were adjusted on 18 March 2020. The figures have changed since 1990. The information about forest land areas used in the calculations has not included groups of owners whose income and expenses have, however, been included in the calculation of operating profit in non-industrial private forestry. These include limited liability companies whose primary field of business is other than forestry and state forests not managed by Metsähallitus. Forest land areas assigned to wood production have been calculated over the entire time series, while forest land areas were used until 2014. The adjustment in areas reduced hectare-specific income at a national level in 1990–2017 by 1.6–3.0 per cent compared with previous information published in the time series. In addition, areas of non-industrial private forest were added to 2018 information. The hectare-specific operating profit, calculated using the adjusted areas, decreased by 3.3 per cent in 2018.

5. Accessibility and transparency of data

The statistics are available in Luke’s statistical database at, starting from 1990.