Swedish Forest Owners' Associations - Development after the 1970s

The first Swedish forest owners’ associations were established in the 1910s and 1920s. The purpose was to promote and improve management of the small scale forests. Since then the society, the forest sector and the conditions for the small scale forest owners have changed dramatically. Thus, it is no surprise that also the conditions for the associations themselves have changed. The purpose of this paper is to describe the development after the 1970s. The theoretical base is the typical development cooperation and its causes. The annual reports and other secondary sources are used as data sources. The number of forest owners’ associations have decreased dramatically and presently is only four. Staff and forestry areas also have declined sharply. These consolidations can be explained by a wish to achieve increased efficiency through economies of scale. After the economic crises during the 1970s the number of members decreased but has since then increased but is still less than before the crises. However, the members’ forest area didn’t decrease as much as the number of memberships and it also has increased more rapidly. The average forest area has increased by15 hectares. Financial growth in the forest owners' associations has increased dramatically during the period studied. In the 2000s sales increased almost linearly with the exception of 2009 when the next recession caused by the global financial crisis temporarily reduced associations' turnover. Although the final results for the associations most years are positive and the losses reported some years are relatively small, some associations have had significant financial problems. In the 1970s it became apparent that during economic downturns the relatively low proportion of equity made them vulnerable. Therefore, they started to build up the equity. Return on equity has as an average during the 2000s been around 7-8% and some percentage lower if total capital is used as denominator. The last ten years, the solidity has remained relatively unchanged at about 50%. The number of association-owned sawmills has continued to decline while production in the remaining sawmills have increased dramatically. Production in the associations’ sawmills has doubled since the early 1990's. Of the associations-owned pulp and paper companies only Södra’s mills remain. One problem for the associations are a risk that the intent to form larger and more efficient organizations leads to increased “distance” between the associations and their members. This may mean a risk to lose “anchoring” to the members and that the officers start to act on their own as regular forest products companies. Another problem is that the members cannot take advantage of the large value growth that has occurred for the associations. Moreover, there are a lot of capital tied up in operations that do not really have any formal ownership.


Issue Date:
2012-05
Publication Type:
Journal Article
PURL Identifier:
http://purl.umn.edu/199303
Published in:
Scandinavian Forest Economics: Proceedings of the Biennial Meeting of the Scandinavian Society of Forest Economics
2012, Number 44
Page range:
88-103
Total Pages:
17




 Record created 2017-04-01, last modified 2017-08-28

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