Forests of Ukraine moves to almost 90% wood contract performance on exchanges

The state-owned enterprise Forests of Ukraine has been selling unprocessed wood on licensed exchanges for three years and has reached almost 90% fulfillment of purchase-sale contracts, said Yuriy Bolokhovets, the company's director general.

"Abandoning opaque direct contracts was primarily our political decision. Many other forestry users continued to operate the old-fashioned way even after 2021. We created a competitive, fair, and transparent resource access for all entrepreneurs," he wrote on Facebook.

Bolokhovets recalled that simultaneously with the reform, the state-owned enterprise Forests of Ukraine was created. He pointed out that the reform and transparent system of sales brought the financial resources that had always been in the shadows to light. Profitability increased from a few percent to 16%. In the past year and a half, the profit of Forests of Ukraine reached UAH 5.35 billion.

The state-owned enterprise completely abandoned state subsidies to support forestry in the south and east. Since 2023, the company has paid almost UAH 15 billion in taxes and fees. In the first half of this year alone, timber worth a quarter of a billion hryvnias was donated to the Armed Forces of Ukraine.

Additionally, the state-owned enterprise began large-scale investments in fire prevention systems and the development of forest road infrastructure. The average salary at the enterprise grew to more than UAH 24,000.

"The implementation of the transparent sales system was not simple. It was a path of discussions, development, and improvement of trade organization mechanisms," said Bolokhovets.

The forest sector reform began in Ukraine in 2016. As part of it, the sale of unprocessed wood through electronic auctions has already been implemented. Since 2021, an interactive map of wood processing facilities has been operating in test mode in several regions.

The sector has implemented the Forest in a Smartphone project, which includes a list of logging tickets for wood harvesting and allows checking the legality of logging on the online map.

From June 1, 2023, Ukraine launched a pilot project for the electronic issuance of logging tickets and certificates of origin for timber. Additionally, the state-owned enterprise Forests of Ukraine started a pilot project for procuring wood harvesting services through the Prozorro electronic platform.