A glimpse into the future of forestry
https://www.la.lv/auctus-capital-par-mezsaimniecibas-nozares-perspektivam-ar-drosu-skatu-nakotne
Forests - Latvia's green gold. Sustainability and value, often equated with forestry as one of the most economically important sectors in Latvia, also from a historical perspective. Although exports of wood and wood products, one of Latvia's most profitable export sectors, are growing year on year, planting and maintaining forests is no less important. According to the Central Statistical Office
Latvia's forest area and timber stock are increasing year on year, thus increasing the positive impact of forests on the economy.
(Source: CSO database on the internet, (Table: MSG010). State Forest Service data.)
According to the Forest Resources Monitoring data, as of 1 January 2020, Latvia had a forest area of 3 292 thousand hectares, of which the state owned 1 521 thousand hectares (46.2% of the total forest area), and other owners owned 1 771 thousand hectares (53.8% of the total forest area). In 2019, the volume of timber harvested increased by 3.7% compared to the previous year.
(Source: Monitoring data published by the Latvian State Forest Research Institute "Silava")
According to the Central Statistical Office, although the deforested area still exceeds the reforested area, with only a slight change in 2015, forest regeneration is on an upward trend.
(Source: CSO database on the internet (tables MEG020, MEG060). State Forest Service data.)
As one forestry industry official explains: "Forest management is an ongoing process that involves much more than just planting and cutting trees - in order for the forest to bring the most profit to the owner, care must be taken to study and maintain the forest environment in the long term. For example, harvesting with harvesters or chainsaws should be carried out in clearings with suitable soil and working conditions. For each harvest, tools should be selected that enable the highest quality timber to be produced. In this case, a forwarder with wide bog tyres, which is highly manoeuvrable, is useful, as it also removes branches and debris that other types of equipment cannot.
The purchase of the new equipment, which has undoubtedly provided an additional springboard for the range of services and capabilities provided, has been facilitated by a financial tie-up with Auctus Capital, an M&A and capital raising advisory firm, which has raised around €1 million for the company through a second, successful partnership. The company has secured EUR 1 million in financing for the purchase of new machinery.
According to the information on reforestation in the country compiled by the State Forest Service, a total of 44.7 thousand ha of forest were reforested in Latvia in 2019, of which 15.6 thousand ha were reforested in state forest and 29.0 thousand ha were reforested in forest owned by other forest owners. Compared to 2018, the 2019 renewal volumes are 3.6 thousand ha higher, with optimal and similar dynamics for the areas felled in continuous felling during the year.
A properly managed forest can increase its value by 25-30% in five years, which means that efficient use of forests is the responsibility of the owners themselves, both for their own interests and with a view to strengthening forestry as a nationally important economic sector in the long-term future.
"Everyone has heard to a greater or lesser extent that forestry is a promising sector, but not everyone can go into all the nuances, the challenges and also the problems that companies in the sector have to face. Credit institutions also have different perceptions of the financing options for companies in this sector, so the contribution of a professional financial adviser who understands the sector is particularly important in such a situation. Based on its experience and successful cooperation with companies in the forestry and logging industries, Auctus Capital can offer companies the most suitable financing model, matching them with the most appropriate financier" - comments Edgars Mālkalns, Financial Project Manager at Auctus Capital.
