RMK’s timber marketing strategy


RMK (State Forest Management Centre) is a state-owned profit-making organisation and one of its activities is to use forests and make them available for timber production, as well as to generate income from this. The timber marketing strategy is the basic document for RMK’s timber sales management as it formulates the principles for timber sales.

In its timber marketing strategy, RMK is guided by the objectives set by the state aimed at ensuring stability of the Estonian timber market and attractiveness of investing in the timber industry while generating the highest returns for the state by selling timber to companies that manufacture durable and environmentally friendly products and create high added value.

1. Legal basis

1.1. Estonia’s Forest Policy stipulates that the strategic objective of supporting the timber industry is to increase stability of the timber market through long-term contracts and to ensure that market mechanisms function in a way that encourages investments in development of environmentally friendly timber processing solutions. For efficient use of timber, its complex and targeted utilisation is ensured, and timber processing in the republic is developed with the aim of exporting timber at the highest possible value.

1.2. RMK sells timber and the right to fell standing trees in accordance with the requirements of the Forest Act and the regulation of the Government of the Republic, with the provisions of the regulation applying also to sales of woodchips.

1.3. Timber is sold on the basis of long-term contracts and pursuant to the instructions approved by a decision of RMK’s Management Board.

2. General principles of timber sales

2.1. Timber sales are conducted with equal treatment of all tenderers and in a transparent manner.

2.2. Contracts concluded with RMK are public.

2.3. Information on the volumes of timber offered for sale is publicly available for market participants and up-to-date.

2.4. RMK generally delivers timber to the customer’s delivery location.

3. Roundwood sales

3.1. General principles for roundwood sales
3.1.1. The roundwood (logs, pulpwood and firewood) harvested by RMK is sold profitably to companies that manufacture products with the longest possible lifespan and are capable of providing added value, using sales methods that contribute to stability of the timber market and continued attractiveness of investing in the timber industry.
3.1.2. Up to 85% of RMK’s annual roundwood volume is sold to processors on the basis of long-term contracts and the principles of cascading use1, while the rest is sold by other means.
3.1.3. For roundwood sales, negotiations are held once a year for the purpose of entry into long-term contracts, while other sales methods are used according to the market situation and sales needs.
3.1.4. In the case of sales of roundwood at the agreed price, contracts are generally entered into for a period of 5 years.
3.2. A tenderer must meet all three general qualification requirements:
3.2.1. Fulfilment of purchase commitments to RMK over the last two years2;
3.2.2. absence of tax arrears to the country of residence and arrears to RMK;
3.2.3. the application complies with the requirements published in the sale notice and the tenderer has submitted a written consent with the sales notice and of acceptance of the Standard Terms for the Contract of Sale of Timber of RMK published on the website www.rmk.ee.
3.3. In the case of the sale of logs on the basis of long-term contracts, the tenderer must meet both additional qualification requirements:
3.3.1. the average gross monthly wage of the tenderer’s employees in the reference period is not less than 70% of the average gross monthly wage in the same period in the activity of timber processing and manufacture of wood and cork products, except furniture (based on data from Statistics Estonia on gross monthly wages in the activity of timber processing and manufacture of wood and cork products, except furniture, in the last published year);
3.3.2. the tenderer is an undertaking processing or converting deciduous and/or coniferous logs in Estonia or an undertaking processing or converting deciduous and/or coniferous logs in Estonia within the same group as the tenderer.
3.4. In the case of the sale of pulpwood on the basis of long-term contracts, the tenderer must meet both additional qualification requirements:
3.4.1. the average gross monthly wage of the tenderer’s employees in the reference period is not less than 70% of the average gross monthly wage in the same period in the activity of manufacture of paper and paper products (based on data from Statistics Estonia on gross monthly wages in the activity of manufacture of paper and paper products in the last published year);
3.4.2. the tenderer is an undertaking processing or converting deciduous and/or coniferous pulpwood in Estonia or an undertaking processing or converting deciduous and/or coniferous pulpwood in Estonia within the same group as the tenderer.
3.5. In the case of the sale of firewood on the basis of long-term contracts, the tenderer must meet both additional qualification requirements:
3.5.1. the average gross monthly wage of the tenderer’s employees in the reference period is not less than 60% of the average gross monthly wage in the same period in the activity of timber processing and manufacture of wood and cork products, except furniture (based on data from Statistics Estonia on gross monthly wages in the activity of timber processing and manufacture of wood and cork products, except furniture, in the last published year);
3.5.2. the tenderer is an undertaking using or converting firewood in Estonia for production of wood fuels (chopwood, pellets, briquettes, charcoal, etc.) or for production of energy or other products (wood panels, wood chemistry, etc.) or is an undertaking in the same group as the tenderer using or converting firewood in Estonia for production of wood fuels or for production of energy or other products.

4. Woodchip sales

4.1. General principles for woodchip sales:
4.1.1. Woodchips produced by RMK (i.e. the shredded wood material obtained from woody biomass (residuals, unlimbed stems, brushwood, stumps, roundwood) during the crushing process) are sold profitably primarily to companies involved in production of heat and/or electricity in Estonia.
4.1.2. Undertakings interested in sales of wood chips participate in procurements organised by local energy producers and, where appropriate, public tenders.
4.2. The part of the energy timber obtained in the course of forest management (residuals, unlimbed stems, brushwood, stumps and firewood) that cannot or is not reasonably marketed as roundwood is sold as woodchips.

4.3. A tenderer must meet both general qualification requirements:
4.3.1. Fulfilment of purchase commitments to RMK over the last two years3 ;
4.3.2. absence of tax arrears to the country of residence and arrears to RMK.

5. Sale of firewood and cutting rights to standing crop to private consumers

5.1. Small quantities of firewood and cutting rights to standing crop are sold to private consumers to meet household heating needs.

5.2. The following purchase requests from private consumers will be accepted:
5.2.1. For sale of 3-metre firewood to delivery locations with guaranteed access for timber lorries of up to 52 tonnes gross weight. Up to two lorry loads of firewood are sold per year to one private consumer.
5.2.2. For sale of cutting rights to standing crop for forest sanitary cutting and for track cutting. The right to cut a maximum of 30 m³ of standing crop is sold per year to one private consumer.
5.2.3. For sale of the right to harvest independently cutting residuals from felling sites.
                                                                                                                                            

1 Cascading or gradual use is the efficient use of timber to capture more CO2 and improve availability of the total amount of timber for products with higher added value.

2 3 To be eligible, an undertaking must have already entered into contracts which have not been cancelled or unilaterally terminated by either party before their expiry date. In the event of withdrawal from or termination of the contract, the reason for withdrawal or termination will be taken into account.