An administrative and economic marriage that has contributed to the harmonization of both sectors
Jerzy Knothe
JERZY KNOTHE, a forest economist and former Vice-Minister of Poland's Ministry of Forestry and Forest Industries, is a frequent contributor to Polish journals dealing with forestry and forest products.
Forestry and the forest products industry form different kinds of relationships with each other. These relationships may simply be loose connections based on market purchases or they may be close partnerships based on long-term contracts. Sometimes their two separate functions merge in the same organization, as when a forestry concern develops its own manufacturing capabilities or when an industrial concern acquires forest land and manages it to generate its own raw materials. This cooperation and exchange of influences result in accommodations between the structures of the forest resources administration and the wood-processing industry.
A kind of integration between forestry and forest industry had already occurred in Poland between the two world wars. At that time the State owned 2.6 million of the total 9.0 million hectares of forest land in the country. At first state-owned forests often sold their standing wood to merchants and manufacturers. Long-term concessions were given, both to exploit forest resources and to lease state-owned industrial enterprises. This system turned out to be ineffective economically, since a large part of the profit coming from forest management was lost to the forest owner during the commercial turn-over and the industrial transformation.
During the 1930s a new management concept developed-one which viewed state forests as one of the important financial assets of the Government. State-owned forests began to do all of their own harvesting. State sawmills were reacquired from lease-holders. The State's sawmill and ply-wood industry was modernized and expanded. A special agency wars created to handle the storage and transport of logs and sawntimber for export, and in time this agency started to play a major role on the domestic market.
There thus developed an integrated forest-industry system, or "complex," under the direction of the state forestry sector. The results were economically advantageous. Profits increased, exports grew, and the management of state forests improved!. After nine years of operation, however, this integrated system was interrupted by World War II.
Poland emerged from the war in a condition of economic devastation. The process of reconstruction was made difficult by the existence of a relatively backward economic structure based on unsophisticated agricultural techniques. Industrial potential was very low. In 1946, 67 percent of the population lived in rural areas and agriculture contributed 66 percent of the national income.
During the war forests had been exploited in a way that only an occupying power can exploit someone else's resources. Furthermore, a big part of the wood industry was destroyed. Since the war an integrated system to manage forestry and forest industries has been created as a result of debates within these sectors about the right form of joint organization from the point of view of the national economy.
Because of the socio-political transformations in Poland, after World War II, there were favourable circumstances for the application of this system. The State took over forests previously held by large landowners, as well as a large part of the forest industry. The newly integrated forestry and forest industries complex was gradually expanded.
In 1956, it already included several industrial branches within the framework of the Ministry of Forestry and Forest Industries The complex's basic resources come from the 6.7 million hectares of state forests and from purchases of wood from the remaining forests (1.9 million hectares) owned primarily by farmers who are small landholders. The result is an economic complex consisting of state forest sawmills, the wood-based panels industry, the furniture industry, the pulp and paper industry, the match industry' the chemical processing of wood and resin, and the industrial processing of minor, non-wood forest products such as wild fruit, mushrooms, and wildlife products such as venison. The entire complex has at its disposal its own machine industry to meet a part of the demand for tools and equipment and special units to provide repairs, construction and transport. The sale of products is handled by separate organizations, and a specialized foreign trade enterprise deals with unprocessed and processed forest products.
Three scientific institutes and several project offices and management planning offices work within the framework of this complex. The complex also coordinates a network of vocational and secondary forestry schools and training centres. Three percent of the nation's entire work force¹ and 3.3 percent of the national income are now accounted for by this forestry and forest industries complex. It produces the entire national output of paper, wood-based panels and matches, 96 percent of the pulp for paper; 81 percent of the sawn-wood; 99 percent of all plywood; 78 percent of the veneer and 64 percent of the furniture.
(¹According to Trends in Forestry Employment in Europe and North America, 1965-77 Supplement 3 to Vol. XXXIII, Timber Bulletin for Europe, FAO/ECE, August 1980, there were 121000 forest workers in Poland, exclusive of forest industries workers, in 1977. Their productivity in 1975 was recorded at 3.28 cubic metres of wood per man-day. As a measure of comparison, the same source lists Sweden as having 192 000 forest workers and a productivity of 10.99 cubic metres of wood per man-day. More detailed figures for national income and the share accounted for by forestry were not readily available.)
Industrial enterprises are associated in unions within the complex according to their functions. The industrial unions, which have legal rights, are economic organizations which direct the enterprises. They maintain their own centres for research and development. In addition, according to the needs of each industrial branch, they run their own transport, construction, repair and trade organizations. Most of the industrial enterprises specialize in the production of one line of forest products, e.g., sawnwood, particle board or furniture. But there are also integrated wood conversion mills, so-called kombinats, which produce several kinds of forest products in order to use the raw material as fully as possible on a single spot. The criteria for deciding whether or not a kombinat should be part of the forestry and forest industries complex or some other state entity are decided according to the main line of products in manufacture.
Table 1. Concerning some principal Polish wood products (1961-78)
|
Product |
1960 |
1978 |
Index of change (1960= 100) |
|
Thousand m³ | |||
|
Sawnwood |
5 197 |
6 320 |
121.6 |
|
Particle board |
29 |
917 |
3 162.1 |
|
Fibreboard |
180 |
678 |
376.7 |
|
Thousand tons | |||
|
Wood pulp |
270 |
517 |
191.5 |
|
Paper and paper-board |
628 |
1 318 |
209.9 |
The executive and coordinating roles within the complex are held by the Ministry of Forestry and Forest Industry, which plays a double role in Poland's economy. First, as an organ of the State, it holds prescribed powers and duties over citizens and institutions within the country, an example of which would be the control of private forest management. Second, with regard to the subordinate economic institutions mentioned above, the Ministry has the responsibility for economic management. One of the most essential aspects of such management is harmonizing the development of both the forestry and forest industry sectors. This is done with the following aims in mind:
· To manage and develop forests in a way which will ensure both their role in the environment and their economic output.· To develop forest industries in a manner which will utilize as completely as possible the resources of the forest, and meet the needs of the country.
· To ensure that the forest will serve the public's needs for recreation and tourism.
· To ensure good working conditions for forestry and forest industries employees, with special attention to wages, social security, hygiene, safety, and self-management organizations.
· To increase economic benefits, part of which is retained by the enterprises and part transmitted to the state treasury.
The Ministry's most important duty in meeting these aims is to secure the economic development of the complex. This requires the preparation of long-term forecasts and programmes that will secure a balance between the available resources and the needs of the national economy. Almost as important is the responsibility of the Ministry in estimating the need for qualified employees and their training.
Technical progress depends in great measure on scientific research. Therefore, the long-term research programmes of each of the complex's three institutes-forestry, wood technology, pulp and paper - as well as the system for financing scientific research are coordinated by the Ministry. The complex also benefits by cooperation with research units of other branches of the national economy and with universities.
One of the ways in which the Ministry executes its tasks is by influencing the distribution of investment credits. Costs of reproduction and modernization are basically covered by funds from the enterprises and their unions, but the division of investment credits for the main development projects depends on the Ministry.
In addition to coordinating development, the Ministry also influences the activities of subordinate organizations by determining the conditions under which enterprises and their unions function. The Ministry, for example, influences the policies for social services and wages prices, foreign trade and finance, as well as the standards of quality for both the raw materials and the main semi-finished goods.
The basic goal of integration is to harmonize the forest resources with forest industry development, and it is from this point of view that results should be seen. The total forested area in Poland is constantly increasing owing to afforestation of barren or unproductive agricultural lands. Between 1946 and 1978, the forested areas increased from 6.5 to 8.6 million hectares. During the last 10 years, state forests produced an average of 20 million m³ of wood annually. In that period the stock of the standing timber increased by 11.3 percent.
In this same period the foreign trade transactions of the forest industry complex increased more than five times, and the import-export account was well balanced. If one converts the raw and manufactured forest products into a raw-material equivalent, it will be seen that the excess of imported forest products, calculated in a raw-material equivalent, is 300-400 thousand m³ The manufactured products component of the export structure is growing gradually.
However, the development of forestry and of the industrial production is not the only argument for the efficiency of the forestry and forest industry integration. Similar results have been obtained in other countries using different systems of cooperation. Therefore it might be useful to pay attention to conscious structural transformations. There has been an increased industrialization of the forest products complex. The ratio of the value of industrially processed forest products to the value of wood raw material increased from 1.9:1 in 1960 to 5:1 in 1978. The ratio of the value of minor, non-wood forest products to the major products increased as well during this time period.
Polish forests are mainly young forests. According to 1978 data, 43 percent of the tree cover is less than 40 years old and only 18 percent is more than 80 years old. The young tree stock needs intermediate cutting which can yield a considerable amount of raw material of middle and small dimensions. On the other hand, the stocks of sawlogs and veneer logs are rather limited. Industrial development has been therefore steered toward ensuring the transformation of greater quantities of material of middle and small dimensions. A glance at Table 1 will demonstrate that, in effect, a strong trend toward increasing such capacity took place during the last 18 years. It is therefore interesting to look at changes in the structure of raw material harvested during the period 1960-78. Table 2 (C) a marked increase in pulpwood and an insignificant decrease of saw- and veneer logs. Pit-props decreased in spite of an increase in the amount of coal mined (from 104 to 193 million tons in the 1960-78 period) due to mechanization and progress in mining methods. Industrial use of small-size wood grew, as did the exploitation of industrial wood wastes (from 1.1 to 2.2 million m³). Consumption of wastepaper in the cellulose industry rose from 238 000 to 487 000 tons. These figures demonstrate that progress has been made in accommodating the industrial structure to raw material resources.
THE LACQUERING LINE IN A POLISH FIBREBOARD FACTORY; a country of specialized forest industries
However, many experts in Poland consider this progress to be inadequate. They point to a decrease in trees of more than 90 years old, and to a decrease in the diameters of sawlogs. An additional factor has been the afforestation of barren land since 1945, which increased Poland's forest area from 21 to 27.5 percent of the country's total land area. This afforested land will come into production initially with a shorter rotation as compared with the normal management plans. Therefore it will not yield normal quantities of large-diameter wood, but will increase considerably the production of medium-and small-size wood.
Consequently, exports call attention to the need for further development of facilities for industrial processing of medium- and small-size wood as well as wood waste and wastepaper. This means more investment in the wood-based panels industry and the pulp and paper industry.
The localization of industry investments and the most favourable size of plant have raised some controversy in Poland. Generally speaking, there has been proper planning for the location of wood industries. Research institutes conducted studies in which, on the basis of structure and the location of forests, optimal sizes and sitings for manufacturing operations were calculated. Important cost factors were taken into consideration independently of whom they would affect. In studies of the wood-based panels and wood pulp industries, for instance, the most important costs were raw material transportations. For the localizations of new pulp mills the availability of water is the necessary factor and integrated pulp and paper mills are favoured. Many specialists are of the opinion that a similar conception of integrated conversion of input wood material should also apply for all new investment in the mechanical wood processing sector.
The studies provided only a general basis for positioning industries. Specific sites have had to satisfy a great number of other requirements including ecological and manpower considerations. The success of the effort made can be illustrated by the decreasing number of long-distance movements (more than 100 km) of supplies to sawmills using conifers.
The percentages of such movements dropped from 22 percent of all movements in 1966 to only 7 percent in 1978.
This does not mean that a total coordination of forestry interests and those of forest industry in investment policy has been reached. Two main problems remain:
· Many industrial investors are eager to take advantage of large-scale production in new factories, but they tend not to take into consideration the fact that the cost of raw materials and the technical difficulties in organizing a rhythmical flow of supplies increase considerably as the production scale grows. It should be mentioned here that, according to one of the rules of the planned economy in Poland, the suppliers cover the costs of the supplied goods.· New construction, or expansion of existing capacity in forest industries, results not only in the overall demand for raw materials going up, but also in an increase in demand in specific regions in relation to specific forest stands. Consequently, appropriate steps should be taken to adapt forest management and to reorganize the system of harvesting and supplying wood. These changes cannot be made without adequate technical equipment and without improvement of the economic infrastructure. Such changes require that new investments in forestry be strictly coordinated with industrial development. In practice this did not always take place, and consequently there are many difficulties and costs have risen unnecessarily.
Table 2. Changes in Poland's forest area and forest industries (1960-78)
|
|
1960 |
1978 |
|
Million ha |
||
|
A. Forest area belonging to state enterprises |
6.1 |
6.7 |
|
B. Wood production |
|
|
|
|
Million m³ |
|
|
Roundwood (7-cm diem. At narrowest end) |
15.3 |
20.0 |
|
Including: |
|
|
|
Sawlogs and veneer logs |
9.0 |
11.2 |
|
Pit-props |
2.3 |
2.2 |
|
Pulpwood |
2.4 |
5.1 |
|
Fuelwood |
1.6 |
1.5 |
|
C. Wood production by percentage |
|
|
|
|
Percent |
|
|
Roundwood |
100.0 |
100.0 |
|
Including |
|
|
|
Sawlogs and veneer logs |
58.8 |
56.0 |
|
Pit-props |
15.0 |
11.0 |
|
Pulpwood |
15.7 |
25.5 |
|
Fuelwood |
10.5 |
7.5 |
Poland's system of integrating forestry with forest industry has resulted in many advantages, given the specific conditions existing in the country. Most importantly, it has contributed to a harmonization of the development of both sectors. But, as with any form of organization, problems are not automatically resolved even with the establishment of an appropriate system of management. There is a continuing need to make the system work more efficiently and to fit it to changing social and economic conditions in Poland and in the world.
