Oct 19, 2012. /Lesprom Network/. Finnish forest researchers are cautiously optimistic that after the slump year 2012, 2013 can be a more positive one for both wood processing industry and forestry, as Finnish Forest Association said in the press release received by Lesprom Network. Paper production will drop by nine percent from 2011 to 2012. Demand for sawn timber continues to decrease this year. Rroundwood prices for softwood will decrease by 5– 6 percent compared to 2011. The overall profitability of the wood processing industry as well as private forestry will decrease this year, predicts the Finnish Forest Research Institute Metla in its Economic Outlook report. The forecast is in line with the one published by the Pellervo Economic Research two weeks ago. Metla predicts that sawn timber production will drop by four percent from 2011. Fellings in Finland are expected to be around 51 million cubic metres this year and 50 million in 2013, which is less than half of the annual growth. Decreasing timber prices and felling volumes mean that forest owners will derive less income from their forests. Metla expects the annual timber revenue paid by the wood processing industry to Finnish families to drop to 1.3 billion euros this year. Thus, the profitability of family forest ownership is likely to be around 75 euros per hectare both in 2012 and 2013, which is one quarter below the average for the 2000’s. 93 percent of Finnish paper exported “The main reason for the problems of the Finnish forest sector is the crisis in the Euro area”, says researcher Jari Viitanen from the Finnish Forest Research Institute. “Get that over with, and the forest sector, as well as other sectors, will forge ahead,” he says. And that is as far as he will be drawn into politics. The importance of the state of Europe’s economy to Finland is explained by the export figures. Overall, 93 percent of the paper and paperboard produced in Finland is exported. For pulp, the figure is 35 percent. In 2011, the Eurozone stood for 39.6 percent of the value of the Finnish wood processing industry’s exports. Add to that the exports to the UK and Sweden, and the figure climbs to 61.3 percent. The lack of European demand for the sector’s products is explained by the crisis, but also by the overproduction in sawn timber in Europe and the move from paper to electronics. On the other hand, the closing down of paper production capacity has meant that paper prices have remained relatively good. Export hopes to Asia and Africa buoy the sawmills Metla’s slight hopefulness is based on the continuing economic growth in Asia and North Africa, as well as the signs predicting a recovery of the construction sector in the USA. On the other hand, the move from paper to electronic media continues to be strong in the USA. Thanks to their economic growth, North Africa and Asia continue to be the saviours of the sawmill owners.Of the timber sawn in Finland, 62 percent is exported. In 2011, Africa and Asia accounted for 32 percent of these exports. The demand for pulp continues to grow in China. Also, China’s new construction programme is expected to improve the markets for sawn timber, Viitanen says. Industry's export value equals 20% of state budget Finland’s economy continues to depend on forests, forestry and the wood processing industry, Viitanen says. For example, the products of the wood processing industry accounted for 19.6 percent of the total value of goods exported from Finland in 2011. In terms of money, their export value was 11.1 billion euros, while the state budget came up to 50.3 billion – with a deficit of 8.3 billion. The value of exports is just one element in the economic importance of the sector, Viitanen says. It does not include the 1.3– 1.5 billion euros of timber sales revenues which the sector pays to family forest owners or the fact that it employs over 83,000 people directly all over Finland, for example. “Much will depend on how the Eurozone crisis is dealt with,” Viitanen sums up.