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Stjepan Posavec; Juraj Zelić; Ivica Fliszar; Karlo Beljan
Croatian journal of forest engineering, 01/2011, Volume: 32, Issue: 1Journal Article
The specific nature of forestry as an economic activity generates problems in realizing the set business plans and executing commercial operations. Business analysis deals with concepts and methods of perceiving the degree of development, as well as with unrealized possibilities of a business entity. The particular character of analyzing business operations of entities dealing with forest management arises, among other things, from the need to assure forest sustainability. In managing forests and forestland, it is not always possible to obey the principle of operational profitability, as the lack of any silvicultural treatments jeopardizes future increment of wood biomass and leads to the decline in the general forest value. Furthermore, the specificity of forest management is particularly evident in a long term cycle of biomass production, and extensive period of time between initial activities and the achieved economic effects, and in investments into forests which frequently exceed the financial possibilities of forest owners. The achieved degree and the unrealized possibilities of developing the forest potential are conditioned by biological factors and by economic and technical treatments. To measure and evaluate the effects of these factors on forest sustainability, specific knowledge is required combined with specific criteria for analytical assessment of the success of business entities dealing with forest management. This paper discusses economic and business analysis in forestry. It presents the results of the research project conducted by the state forest company »Hrvatske šume« d.o.o. and Faculty of Forestry University of Zagreb over a 5 year period. The data regarding the economic value of the forest, annual cut value, biological regeneration costs for all forest management units in Požega Forest Administration, including incomes and costs of forest harvesting have been analyzed together with the data regarding profitability and economic indicators. The actual cutting value method has been used for the analyses of the stand value. The Activity Based Cost Method has been used for the cost analysis. The cost-effectiveness and profitability in forestry have also been calculated. Požega Forest Administration manages the area of 52,025 ha, mainly productive forests in the Municipality of Slavonia and Požega. The total annual cut is 140,991 m3 on the area of 3,615 ha. The total growing stock of the state forests is 9,744,426 m3, which includes 9,200,025 m3 of even-aged forests and 544,401 m³ of uneven aged forests. The annual wood volume increment is 253,947 m3. The average forest stand value is 46,871 HRK/ha, or 54,723 HRK/ha without first age class (see Fig. 1 Forest value per management unit). The total costs of biological regeneration are 1,529 HRK/ha, and without forest management, silviculture, forest protection and wood construction it is 7,029 HRK/ha. The costs of the biological regeneration are shown in Fig. 2. The value of the annual cut for Požega Forest Administration is 10,214 HRK/ha (see Table 1). The costs of forest harvesting in 2007 are 8,460 HRK/ha on average, and 8,659 HRK/ha in 2008. Expenditures and revenues of forest harvesting in Požega Forest Administration 2007/2008 are shown in Fig. 4. If the costs of biological regeneration are included, the cost-effectiveness ratio is less than one (e<1), meaning that the management of the selected forest administration is not cost-effective. However, according to the presented negative economic indicators, profitability in forestry has shown positive forest management results. The possible measures that could lead to the increase in profitability are those affecting the company income. To achieve this goal it is necessary to lower the forest biological regeneration costs, to lower the market sale price, to increase the engaged resources, and to improve the capacity utilization. This research has shown that specific understanding and measuring of forest potentials are conditioned by biological factors and by economic and technical treatments. To measure and evaluate the effects of these factors on forest sustainability, specific knowledge is required combined with specific criteria for analytical assessment of the success of business entities dealing with forest management.
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