Serbia

Forest economics

Forestry contribution to GDP

The number of workers in forestry institutions engaged in forestry is 4,995.These are institutions that are engaged in growing and silviculture, logging, scientific and educated in forestry operations and other activities related to forestry. Wood processing and furniture production in late 2014 consisted of 2,182 companies employing 22,965 workers. More than 90% of companies are privately owned and are mostly located in the central parts of Serbia. Most of these companies are engaged in processing of wood (1,504), primarily the production of sawn timber, joinery and other wood products. Other companies are engaged in manufacturing office furniture, kitchen and other furniture (678). This number of companies is necessary to add approximately 1,600 active entrepreneurs, which largely operate in a gray

area, so the total number of active business entities in the wood industry in Serbia is much higher. In addition to wood processing, it should be noted that hunting and hunting tourism have a symbolic importance in the development of the forestry sector. Hunting services employ 90 people in Serbia. The share in GDP in Serbia is 1.4%, while the forestry and timber industry, its contribution to total exports accounted for 5.7%, with a steady positive trend of growth in recent years. The share of forestry and logging in GDP, without the participation of the processing timber is 0.3%.

Table: Enterprises and number of employees

Table: Representation of company size as a percentage of the Republic of Serbia

The share of medium and large companies is very small in the wood processing and is only 3.6%. This structure of companies is relatively unfavorable from the point of export competitiveness and their position in major export markets. Analysis of data from the Action Plan support the timber industry of the number of companies in relation to their activity and spatial distribution shows that the total number of companies engaged in primary wood processing extremely large and that there is a significant mismatch between their capacities and schedules with production potential of forests. The largest number of registered firms located in regions with the lowest forest cover. Comparing the total annual growth of the number of enterprises for the production of sawn timber, it can be concluded that in some regions, especially Backa and Belgrade, the installed capacity of which is a high percentage of raw materials necessary to ensure the shipment on the side with a distance over 300 km. In the area of ​​Belgrade, where the participation of forests is only 2.3% of the total forest area in Serbia, employ 37.1% of workers. In other regions such as Bor, Zajecar and Pirot number of companies involved in processing of roundwood is extremely small. In the area of ​​these three districts recorded an annual growth of forests in the amount of 16% of the total increase in Serbia. On the other hand, the number of registered companies in the field of wood processing was only 2.5% compared to the total number of all companies in Serbia. The low level of use of local raw materials and a small number of companies for wood processing in certain areas directly leads to a reduction in the number of employees, which further leads to depopulation. Therefore, further development of the manufacturing industry, especially in wooded areas has a very important role in increasing the employment rate, increasing the welfare of society, and to a certain extent, the increase in overall GDP.

Forest products import and export trade

In addition to agriculture and food industry, wood industry is the second most important sector in the country, which has a constant trade surplus. Regarding the structure of exports, one half of export products belonging to the furniture industry, and the other half of other products of wood. Considering the free trade agreement has increased the export of furniture to Russia by 50% in 2014 when compared to 2013. During the past decade, the timber industry has been one of the most attractive sectors for foreign investors. Tarkett French, Italian Ditre Gruppo and Fantoni, Austrian Kronospan and many others have built their factories in Serbia in order to supply not only domestic regional markets, but also of the EU market and the market of the Russian Federation. Sawmilling traditions in Serbia dates from the early 19th century. Today, Serbia is the second largest producer of sawn timber beech and poplar wood and the third largest producer of sawn hardwood in the Balkans. Sawn timber, except furniture is the most important forest product of the wood processing industry in Serbia. Sawmill account for 63% of total wood processing enterprises in Serbia. Annual production of lumber sawmills exceeds 300,000m³, 80% of which is beech and poplar wood. Chipboard is a wood product with the highest demand in Serbia. Although the Austrian company Kronospan invested in the factory plate in Lapovo town in 2009, and the Italian company Fantoni privatized Serbian company “Spik Ivanjica Chipboard”, demand for plates is still very high. Increasing domestic production was insufficient to meet the needs of the market, so imports of particle board is 8,000,000 $ per month. When it comes to the production of veneer, peeled veneer makes up about 90% of the total production of veneer and poplar peeled veneer is a leading product, while beech veneer second quantity of production. In Serbia, products and oak, ash and walnut veneer. The production of hardboard panels varied significantly in the past. After the drastic fall of 61% in 1999, production began to increase after 2000. Hardboard is manufactured exclusively at the factory “Simpo Kuršumlija” with a capacity of over 40.000 m3 per year. In addition to use in the domestic market, exported to Greece and Turkey, although the import of this product is very large, mainly from Germany and Hungary. In recent years there has been a significant increase in the production of panels of solid wood. The products are mainly made of beech and poplar. These products are used for stairs, tabletops and other furniture parts. Expansion of production companies that were engaged in sawmilling, especially in Central Serbia, created a product that has significantly increased exports slab of wood. The main export markets are Germany and Italy. Production of wood joinery has a long tradition in Serbia. A large number of companies manufacturing high quality windows and doors, a significant quantity directly exported to the Russian Federation and the EU. Manufacture of doors and windows mainly of oak and beech, however, and spruce and fir are common raw materials. The latest product in wood industry is a pallet. Pellet market in Serbia has been around since 2006, but intensive pellet production began in 2008. In Serbia, the pellets produced from beech and poplar wood with small stakes spruce. Today a large part of pellet production is exported, the main export markets are Italy, Germany and Greece. Wood accessories is one of the most important for the wood industry. Exports of wooden hangers and various other articles of wood is increasing, a major export market besides Italy and Germany as Finland, the Netherlands and Switzerland. Furniture produced in Serbia can be classified into three categories: furniture of solid wood, panel furniture and upholstery. About 30% of the produced furniture is furniture from the massif.

This is the most expensive furniture produced from domestic raw materials, and it is mainly exported. Factories that produce furniture in Serbia are equipped with modern machines and follow world trends, both in preparation and in the surface treatment, and the products are competitive on the European market.

Table: Import and export of wood products (US$)

In the current use of natural resources as well as forestry industries, the dominant role is the use of wood, while the use of other forest products partially neglected. Such an attitude is not good, especially in the current business conditions when circumstances require the use of all available resources with which forestry as a branch of economy and society in general have. Modern food, pharmaceutical and cosmetic industry is increasing the use of indigenous medicinal plants, fruits, mushrooms and other forest products. In our economy, non-timber products are gaining in importance expansion of healthy food and a healthy diet. However, considering the official statistical analyzes, there is no concrete data on how much traffic and realize how many people live by this type of economy. Production and trade of non-timber products still represented more at the local level and it is mainly concerned with nature lovers. Neglecting the development of this type of production can be a strategic error of the economy as a whole, especially if it is known that the Republic of Serbia is one of the most suitable places to launch organic production. Organic farming can be one of the most important advantages of the domestic economy, and with this kind of production and positioning in the global market should lead to the development of production and trade of non-timber products.

Forestry – related industrial chain

The chain of production and supply is gaining importance in industrial production, the sale and the successful creation of surplus value. Efficiently locate and use resources effectively set logistics and the development of primary and secondary processing industry is one of the priorities of all sectors within the economy that operates in global economic conditions, strong competition, which is now reflected in each business field. Forestry is in the field was the economy, which has to be based on the concept of sustainable development, which is now accepted in all developed economies of the world. To make the concept of sustainable development to be successful, it is necessary to carefully, based on internal resources, establish an efficient supply chain, production and forestry services. Forestry is of great importance for every economy.

The modern industrial chain in forestry is based on raising forest plantations, maintenance, development of hunting tourism, gathering and processing of non-timber products, development of resorts and parks for sports recreation, felling of forest trees, transport, primary production, processing, exports, production and secondary energy production and secondary processing of primary products. This is a complete production chain has been successfully installed in many developed economies, where he carefully takes into account the successful use of each production, manufacturing and service potential, provided it is not detrimental to the environment and sustainable development without threaten future generations. This kind of use of forest resources is the establishment of architecture in economic terms, which aims to facilitate the development of advanced systems planning, analysis, production and marketing of forest products. When it comes to forestry and its organization in Serbia, it should be noted that under the influence of the European Union is slowly taking over the development of concepts of European countries. The chain of production and supply in Serbia has its cracks, or the work of foresters and entrepreneurs with extensive experience in forestry production tries to establish a functional chain of production in forestry, in local and regional contexts. Serbia is slowly rebuilding its forest resources. Raising the nursery and seedling development of quality materials, the initial item in restoring forest resources and the establishment of successful forestry. In the production of nursery plants, improvement of forest species and care of young forests play a major role forestry institutes, among which the Institute of Lowland Forestry and Environment in Novi Sad. Important preconditions are the development of forestry and road infrastructure to facilitate transport and reduce the cost of inbound and outbound logistics at cutting wood. The thing is necessary to pay more attention to the domestic front, the development and establishment of a culture of collecting non-timber products which can be a significant segment of the concept of organic food production, which should be based on the local economy and develop a strategic advantage over the competition production chain. Transport is one of the most important items accompanying forestry production. It is necessary to carefully establish and logistics companies in forest and timber processors with the industry to a quick and inexpensive way to provide input – output road and river transport raw materials and products. When it comes to the domestic economy, it is necessary to spend a lot of effort and energy with the help of domestic and foreign capital to develop the primary and secondary sectors of production and properly utilize local and regional resources in forestry. Increasing industrialization in forestry, will increase

employment and overall welfare of the society, but at the same time must be taken to move the industrialization in rural areas, and thus enable the balanced development of the country. It should not be omitted, and the production of energy and reduce dependence on imported energy, using primary forestry product, but also uses secondary product from wood industry. In addition, should the maximum impact on the development of forest, mountain and spa centers that will develop the services sector and enable the reduction of unemployment in those regions. This will allow people to enjoy the natural beauty of the forest and use resources in order to recreate, enjoy healthy lifestyles and increased overall health of the nation. We can conclude that it has successfully created a chain of forestry production is necessary for the normal functioning of a society and economy. It is necessary that the chain is strictly controlled so as not to threaten the concept of sustainable development and threaten the survival of future generations in the country and the World.

Forest Management

• Institutions associated with forestry

Governmental organizations;

Public Forest Enterprise “Srbijašume”

Public Forest Enterprise “Srbijašume” was established in 1992. and managed with the state forests on the area of 892.598 hectares.

Public Forest Enterprise “Vojvodinašume”

Public Forest Enterprise “Vojvodinašume” was established in 2003. and managed with the state forests on the area of 99.000 hectares.

The Public Company for Forest Management “Vojvodinašume” is organised into three organisational levels: Company Directorate, Sections of the Company- forest holdings and the sections of the Company “Vojvodinašume – Lovoturs” Novi Sad – Petrovaradin and „Vojvodinašume-Turist“ Petrovaradin and Work units – forest administrations and other work units.

The Company Directorate performs strategic, development and coordination activities and supervision of work of sections of the Company. Organisational structure of the Directorate consists of sectors.

Forest holdings are established on the level of forestland areas and their organisational structure consists of services.

Forest administrations are basic units for planning and organisation of forest management activities.

Apart from forest holdings such as: “Sremska Mitrovica” Sremska Mitrovica, “Sombor” Sombor, “Novi Sad” Novi Sad and “Banat” Pančevo, the Company also consists of the sections of the Company specialised in hunting and breeding game “Vojvodinašume – Lovoturs” Petrovaradin and „Vojvodinašume-Turist“ Travel Agency is a specialised agency, tour operator.

The Public Company “Vojvodinašume” has over 1,852 employees, out of whom 241 are with university degree, of which 163 are forest engineers; 490 employees with secondary school degree, out of whom 269 are forest technicians and 1,121 employees in direct production (data from 2004).

Forest ownership

Total forest area in Serbia amounts to 2,252,400 ha of which state forests cover 1,194,000 ha or 53.0%, and private forests cover 1,058,400 ha or 47.0%. Compared to previous reference reports (45.2% state forests: 54.8% private forest), the ratio of forest ownership changed in favor of private forests by 1.8%. In general, compared to the reference year 1979, the increase of area under forest is 356,863 ha of state forests and 108,748 ha of private forests. In general, the condition of state forests can be characterized as satisfactory, which is supported by the fact that the average volume in state forests is 185 m3 ∙ha–1, and current volume increment 4.5 m3 ∙ha–1. Increment percentage is 2.4%, which is generally rather high, and proves the stability of stands in Serbian state forests. Private forests are poorer in the quantitative sense, with average volume 133 m3 ∙ha–1 and current volume increment 3.5 m3 ha–1. Increment percentage in private forests is somewhat higher than in state forests and accounts for 2.6%. The reasons are the dominant coppice origin and age structure. It can be concluded that the average volume increased considerably compared to the reference year (1979), when the average volume in state forests was 136 m3 ∙ha–1, current volume increment 3.37 m3 ∙ha–1, and increment percentage 2.5%. In private forests in that period average volume was 91 m3 ha–1, current volume increment 2.32 m3 ∙ha–1, and increment percentage was also 2.5%. As for the annual changes, it can be concluded that the average volume increased in state forests by 2 m3 ∙ha–1 annually, and in private forests by 1.6 m3 ∙ha–1 annually. These facts should be manipulated with care, because of the previous data collection procedure and intensity (till 1979), particularly in private forests, which was based on stand inventory data, and the method of assessment was applied in the unmanaged part of the area in state forests. Private forests were managed and inventoried minimally by the inventory 1947-1949, and the statistical data per years and periods were calculated by balance compared to the mentioned inventory. Forest density, expressed by the number of trees per ha, was considerably higher in private forests and amounted to 1,011 trees∙ha–1 compared to 875 trees∙ha–1 in state forests. The cause of the higher number of trees per ha in private forests is their more unfavourable age structure (younger forests), the dominant coppice origin and, for this reason, the dominant even-aged stand structure.

Forestry policy

After the system change in the 90es of the last century Serbia became „new democracy“ and passed transformation from centrally planned economy towards the system based on market economy. Along with this transformation process the existing sectoral policies were either changed or newly formulated. In the Serbian forest sector most of substantial change, like formulation of new strategic and legislative documents as well as consideration of changes in existing organizations (e.g. public forest enterprises), can be traced back to the period 2000-2010 and internationally-assisted projects (e.g. FAO) as main drivers.

The Forestry Development Strategy of the Republic of Serbia (2006), emerged as an outcome of the project funded by the Finnish Government, executed by the FAO and facilitated by the Directorate of forestry. Two principles, forest sustainability (sustainability of forests and forestry development) and forest multifunctionality are strongly emphasized. The main strategic goal is clearly formulated in terms of “maintaining and improving forest condition and pursuing development of forestry as an integral part of overall economy”. For the realization of this goal, the Government committed itself, among others, to provide enabling regulatory, institutional and economic framework and to launch activities on the formulation of the National Forest Program (NFP) as the action framework for the development of the forest sector. This forest policy framework is not in place yet.

The new Forest Law was enacted in 2010 and its most essential change was that the private forest ownership was put on the equal footing with the state one. The Law differentiates among “državne šume” (state-owned forest) and “šume sopstvenika”, the latter being comprised of forests belonging to “physical persons” (private forest owners) and forests owned by “juristic persons” as companies (“privredna društva”), cooperatives (“zadruge”), citizen associations („udruženja građana“) or church and other religious communities. The term “public forests” (usually referred to forests owned by public organizations such as state and municipal bodies) is not used as such. The Law gives attention to above mentioned owner-ship categories, yet it keeps focus on their “quantitative characteristics”, e.g. it differentiates between “šume sopstvenika” above 100 ha and under that size, whereas qualitative aspects remain unspecified. The single priority seems to be given to the “interests of the forest”, which is by the Law proclaimed as a good of a common interest. There is no explicit reference to the interests of the various forest owners (public/private; large/small, rural/urban, etc.) and forest users.

‘Program for forestry’ development remains, as a strategic budgetary-financed document, it refers now to the territory of the whole Serbia (previously it was divided between the Republic and the provincial level but this is not the case anymore, because provincial competences in forestry matters are terminated) and the issuing body is not the Parliament but the Government (2015). Action plan remains as an implementation mean, yet the Minis-try is not obliged to provide annual progress reports to the Government (2015), as this was required before.

Investigation and monitoring of forestry resources

National forest inventory is financed from the national budget and shall be conducted every ten years “for the purpose of getting the state of the forests measured and used for strategic sector planning, for other state organs or economy branches, defense or research”. Inventory is a responsibility of the Ministry in charge for forestry, which can transfer this duty via public calls for tenders.