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bne December 2018 Cover story I 25
Although Jelinek is right about the consolidation and the “division of labour” between the two companies, the information concerning the amount of contracts is less accurate.
According to the data provided to bne Intellinews by Czech Forests, the combined value of contracts awarded to both compa- nies in 2011 was $6.8mn. In 2018, Uniles received contracts worth nearly $30mn, more than the two companies combined have received in any previous year.
The wood market on the verge
of collapse
Although it is undeniable that the Agro- fert-owned Uniles has profited from the new tendering system, it is equally true that it has suffered, as much as any other forestry company in the country, from the recent fall in wood prices caused by the bark beetle infestation.
The growth reached its limit in 2016, when most forestry companies in the Czech Republic, including Czech Forests and Uniles, reported significant revenue decreases compared to the previous years. The bark beetle overgrowth in Czech forests meant that more trees
had to be cut down in order to prevent further infestation, which led to a growing supply over stagnant demand and pushed down prices. This price fall hasn’t stopped since.
Archbishop’s forests and farms Olomouc, the largest private owner of forestland in the Czech Republic, has already lost over $8mn in revenues this year.
“The price of wood fell by 50% year-on- year, so we lost half of revenues. Another problem is that the wood infested by bark beetle is automatically put into a lower-quality category, which reduces the price even more,” the director of the
Uniles revenues (in mln. CZK)
company Petr Skocdopole told bne Intel- linews in an interview. “Since you are forced to cut down more trees, you need to do more planting, which you also have to pay for,” he added.
An ecological catastrophe
Back in 2011, there were two main con- cerns about the new tendering system for forestry work. Many experts warned that an effective takeover of the state- owned forests by private companies would lead to a significant deterioration of the quality of the care for the forests,
are facing the worst bark beetle infesta- tion in 200 years, according to the Czech Environment Minister Richard Brabec. The amount of wood infested by the beetle has risen from 2mn cubic metres in 2015 to over 5.5mn in 2017.
“If you take a good care of the forest, the trees can defend themselves against the beetle on their own. The overgrowth of the bark beetle occurred as a conse- quence of an insufficient forest care. The trees are no longer able to defend themselves,” Skocdopole said.
“When the rules changed, making price the only criteria considered in the tendering process, these large companies killed each other”
which would debilitate its basic func- tions: oxygen creation, water retention, etc. Similarly, many experts cautioned against a system designed for only a handful of large companies that would end up dominating the forestry market.
“When the rules changed, making price the only criteria considered in the ten- dering process, these large companies killed each other. They lowered their prices to such a degree that it led to
a mass departure of people from the sector,” Petr Bik, forest administrator of the state-owned Czech Forests told bne Intellinews.
“To fill the positions left by skillful work- ers, the companies became more and more reliant on agency workers, and
the quality of the care went down,”
Bik added.
Today, the forests in the Czech Republic
Although a bark beetle infestation is nothing new in the Czech Republic, the current crisis has reached a whole new level.
“We were dealing with a bark beetle infestation in the 90s, which we were able to manage. But that was noth-
ing compared to the current situation. We have had dry brooks for two years already. There is water only two months a year: in January and February. We no longer have any underground water,” Richard Podstatzky Thonsern, one of the large private forest holders in the coun- try, told bne Intellinews in an interview.
Business vs. nature
Virtually everyone bne Intellinews spoke to believes that Czech Forests’ new ten- dering system largely contributed to the current crisis.
“Besides the drought, it is one of the reasons why the bark beetle infestation erupted. That’s why it is important to pay attention not only to the monetary side, but also to provide a proper care. These large companies go to places far away from where they are based, har- vest the trees, plant new ones, and leave again. The price you pay for a cheap service is a bad forest care,” the agrarian analyst Petr Havel told bne Intellinews.
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