Wood processing in Ukraine - the risk of losing control over the industry
The global economic crisis has affected the Ukrainian forestry still since 2008. And already in 2008 - 2009 Ukrainian forest enterprises had to face the problem of wood selling, which reduced the amount of logging. Due to this problem the Ukrainian government adopted a policy to support native producers and one of the main goals of forestry was to provide raw materials for wood processing companies of the country. This resulted in decrease of raw materials export volumes, which caused an increase of prices.
Ukrainian wood processing companies believe that the crisis in the industry is beneficial for exporters and foreign enterprises. And at the moment the probability of crisis of Ukrainian wood processing industry is quietly possible. Top Ukrainian wood processing companies must pay the fine imposed by the Antimonopoly Committee in the amount of 419 million UAH, which is 10% of annual turnover. This penalty could bankrupt all enterprises of the industry.
CEOs who work in the industry believe that the wood processing industry in Ukrainian prevents foreign companies to use the forest resources of the country. They want to take into exploitation 3-4 m3 of natural resources per year. Wood processing companies of Ukraine consumes the same amount of resources, they need.
Another negative factor affected the crisis of wood processing industry are companies that export wood as a raw material abroad. The state supports the cooperation with exporters not paying attention to later purchasing of a finished product from foreign companies for much more expensive prices in comparison with the possibility of product manufacturing in the country.
State forestry agency increases the prices for raw materials each quarter at auctions and this leads to the rise of the cost of products sold by woodworkers, which results in the decrease of competitiveness of the goods. This, in turn, challenges the fine of the Antimonopoly Committee.
In case of bankruptcy of Ukrainian companies, foreign enterprises will buy up them for pennies and get the fully control wood processing industry in Ukraine.
Let us remind that the Antimonopoly Committee fined Mebelderevprom association for 419 mln. UAH for the distortion of trade results in 2011. According the order of the Committee 14 members of the association during the auction apportioned unprocessed wood lots by arrangement. As a result, more than 110,000 lots were purchased without any competition.
The wood processing industry have been positive changes in the speed and volume of production during last 8 months of this year, which currently is equal to 106, 7%.
