Current issue: 55(2)
Under compilation: 55(3)
For non-industrial private forest (NIPF) owners land with its timber production is an example of a capital asset. Developments in the asset’s value and yield depend not only on forest management but also on other factors that the owner cannot control, for example timber prices and the production circumstances, such as soil and climate. One important basis for decision making related to management strategy and, in the short run, to cutting and silvicultural activities is economic analysis and accounting. The owner has to decide whether to invest more in his property (planting, cleaning, building of forest roads) or disinvest (sell timber or the holding). He has to find ways to increase revenue and cut costs.
However, generally accepted accounting practices for NIPF owners are lacking. Applying business economic accounting principles and forestry accounting traditions, we outline a proposal for a profit and loss accounting and balance sheet for NIPF holdings with a view towards increasing economic awareness among private owners. Key concepts are net profit of the enterprise and calculated profit of the property. Other profit measurements that are used are gross margin, forestry margin, operating margin and operating profit. Calculated profit is based on adjusted net profit. The main concern, however, is to consider the change in the holding’s market value caused by changes in stock volume, quality and price. The contents of the accounting framework development here are applied to three management strategies. The return on investment (ROI) of forestry is compared with other investment alternatives.
As the use and value of forests have increased, forests have been managed more as a business. Financial bookkeeping defines the production costs of wood, costs of forest management work, investments in forest improvement, taxes and administrative costs, income from the sales of forest products etc. Bookkeeping reports the annual costs and income in the forestry, but does not give information of the future profits or appropriate organization of the economy of forestry.
The author introduces a system that he calls “metsänhoitoteknillinen tarkkailu” (silvicultural monitoring), which would give economic information of the forestry, and could also replace a forest management plan in the private forests. The bookkeeping system will list in detail the volumes and areas of fellings and silvicultural measures in different years, and deduce the sustainability of the use of forests and future incomes in forestry.
The PDF includes a summary in German.