Analyse of the early effects on the Ukrainian forestry sector as a result of the Log Export ban : an interview study with economic analyses, including theories about trade and export

University essay from SLU/Dept. of Forest Products

Abstract: Illegal logging and illegal export of roundwood has been of great concern within the forestry sector around the whole world for a long time. One of the most common tools used in hopes to resolve this issue is a law called The Log Export Ban (LEB). When the government in a country implements this law, it means that the country is no longer allowed to export unprocessed wood. This has a drastic effect on the country itself, but also surrounding countries that has been dependent on import of the unprocessed wood. The aim of the law is however to help the country develop its national processing industry, create more job opportunities and this way increase the national income. The hope is also that a LEB will reduce the amount of illegal cutting and over harvest. Ukraine has been suffering from these issues and therefore the parliament decided to insert an export ban on all roundwood, except pine, starting in November 2015 and for pine starting from January 2017. This field study, conducted from April- May 2016, aims to analyse the early effects of the LEB in Ukraine, based on the national forest organisations perspective. The opinions about the implementation of a LEB in Ukraine are widely spread among the respondent in the research. In general it is clear that the private forestry sector is in general positive towards the law, while that governmental sector is strongly negative. This result was not surprising, knowing that Ukraine has no forest privatisation, where only the governmental sector can own, harvest and export roundwood. Now when the country is facing a LEB, the forestry sector has to lie out a business strategy adapted to this new business environment in order to succeed. Although, the results show a very slow change, where most companies have chosen not to adjust to this new law because of political instabilities and an uncertain future. Theories about export restrictions suggest that an export ban should lead to lower timber prices on the local market because of higher supply. This has not happened in Ukraine even if the harvest volume has stayed the same. Instead the governmental companies, who sell the timber, have increased the national prices slightly. This has left the private processing sector very disappointed, where they would like to buy more roundwood, but the prices are too high. At the same time the governmental companies explain that their timber goes to waste because they cannot sell everything on the Ukrainian market. The explanations to these results seem to be complicated and should be investigated further. During this research, most respondents, explaining how deep it has its roots in the country, brought up corruption to the surface. Field trips, extended interviews by the researcher of this thesis, together with Ukrainian articles, news and professors all indicate that there is still illegal export from Ukraine to Romania.

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