Business has identified the preconditions for the restoration of the woodworking industry
Prior to the full-scale war in Ukraine, the woodworking industry was one of the most promising sectors of the economy, providing Ukrainians with hundreds of thousands of jobs. In 2021 alone, exports of wood and wood products amounted to nearly 2 billion US dollars, which was about 3% of total exports of Ukraine.
Russia’s military aggression in Ukraine has made it impossible for woodworking companies to operate stably and meet their obligations under the majority of international contracts. The industry is not exempted from VAT refunds, a significant number of its workers is mobilized but the wages still need to be paid. All these factors together with high raw material prices make it much more difficult to restore the efficiency of woodworking companies. However, the business is making every effort to resume production, find logistics ways to ship finished products and supply raw materials.
With state support, the industry has the potential to quickly resume production, preserve and create new jobs for Ukrainians, including internally displaced persons. Thus, in its letter, the European Business Association asked the Prime Minister of Ukraine to consider a list of important steps to support woodworkers.
As raw wood is currently sold on commodity exchanges via electronic trading systems, where a regular forest user sets the initial prices and the buyer is the highest bidder, we ask the authorities to recommend regular forest users to set an affordable initial price given the difficult financial situation of domestic woodworking enterprises.
In order to minimize costs, we ask you to temporarily, for the period of martial law, to provide for the sale of unprocessed wood to domestic woodworkers also under direct agreements between state forests and woodworking enterprises. According to the EBA experts, selling wood by auctions on commodity exchanges
We ask to publicly appeal to the international organizations – Forest Stewardship Council (FSC) and the Program for the Endorsement of Forest Certification (PEFC) to resume work – on verification of the legality of the origin of Ukrainian wood, where no hostilities are taking place.
To guarantee the most transparent work of the State Agency of Forest Resources of Ukraine and state forest enterprises accountable to it for FSC and PEFC certification of Ukrainian forests and harvested timber. Having lost the opportunity to buy and use certified Ukrainian wood, plywood and chipboard manufacturers, furniture companies will not be able to fulfill export contracts.
It is necessary to increase the number of international road freight permits for Ukrainian carriers. Alternatively, the introduction of a non-permitting regime with the maximum number of EU countries may be considered. Due to the hostilities, European transport companies refuse to provide any services both directly to Ukrainian companies and on the territory of Ukraine. As a result, only Ukrainian carriers are involved in international transportation, so all available permits become out of use promptly.
It is necessary to recognize the woodworking industry as strategic for the efficient functioning of the economy and create a working group to quickly address the problems of resuming production of woodworking enterprises. Also, there is a need for the involvement of relevant ministries, the State Forestry Agency and the EBA. We are confident that such efforts of the state will help restore the stable operation of enterprises and contribute to the revival of economic activity in the country.