RIGA — The shipping abroad of Latvian timber and wood products, which makes up a fourth of the country’s export turnover, has dropped by nearly 40 percent from last year according to the Ministry of Agriculture.
From January to June 2008 Latvia exported 459 million lati (€652 million) worth of timber, but only 277 million lati worth for the corresponding period in 2009.
Kristaps Klauss, director of the Latvian Forest Industry Federation, pointed to a drop in demand in Latvia’s export markets and insufficient cost control as the culprits of the steep decline.
“Demand in the global market is decreasing,” Klauss told Baltic Reports. “Our prices were higher. Latvian producers cost 13 percent more than Swedish companies. Now we are back in the market. Our low prices are almost the same as in Sweden.”
Wood processing is Latvia’s most important export industry, comprising 22 percent of export turnover and five percent of country's GDP. Photo by Juris Neikens.
Latvian wood typically ends up in Northern Europe. In addition to being a competitor, Sweden actually imports more Latvian wood than any other country. Other large export markets for Latvian wood are, in order of volume, the United Kingdom, Germany, Estonia, Lithuania, Finland, Denmark and the Netherlands.
Despite the drop in exports, Klauss expressed optimism that exports would soon rebound.
“The market shows that big sawmills are working in the same amount as 2006 already. They returned to last’s years production level in May,” Klauss said. “We hope that the lowest point is behind us. We hope that tomorrow will be better than today.”
The gross domestic product of Germany, one of Latvia’s main wood export markets, increased by 0.3 percent in the second quarter. Meanwhile Latvian wood processing companies were trying to expand to markets outside of Northern Europe.
“We have worked with a wide range of countries. We have worked with Japan, Egypt, UK, Germany,” Klauss said. “The UK market is still decreasing, therefore we should find new markets … we will try.”
