The ethnic identities of the Estonians and Latvians were suppressed from 1227. The countries enjoyed 20 years of independence before being occupied by the Soviets, ‘liberated’ by the Nazis and then absorbed into the Soviet empire. In 1991, they finally regained their independence.

During the Soviet period, collective farms were created which absorbed ‘private sector’ forests. At the same time, some 260,000 Estonians and 600,000 Latvians were either killed, deported to Siberia, or escaped abroad, depopulating the countryside. At the beginning of the second world war forests covered 35% of the land mass but this has risen to 50% through natural regeneration of abandoned farmland.

The state sector woodlands, about 50% overall, remained in the State Forest Service during the Soviet period and were well managed. The ‘private sector’ woodlands in the collective farms were largely neglected and are therefore heavily over-stocked after 50 years of non-management.

Privatised states

Economically, Estonia is considered the most successful of the three Baltic states. Land in both countries is being privatised, with people who can demonstrate family ownership pre-1940 entitled to claim back their land. The state owned forests remain in the public sector.

The average property size is still 8ha. Where no owners are found, the land is auctioned to locals for ‘privatisation vouchers’ which generally means a 60% reduction in market value. Only if these fail to find bidders are they sold at public auction.

Foreigners can own property outright, but it can be problematic. Local authorities can object and, in border regions, foreign ownership is out of the question because of national security.

Ownership through a company is much easier but local authorities still have the right to purchase the property at the price agreed. Companies can be 100% foreign-owned, but at least 50% of the management board must consist of local residents. In Latvia directors must sign official documentation. Usually a local lawyer can be found to be the 50% local director. You can get a residency and avoid the involvement of a local but it is not recommended. Being a director does not mean one can authorise payments. Bank transactions are electronically managed and can be controlled from abroad. Bookkeeping has to be done locally and auditing rules are tight.

Felling laws

There is an impression in the UK that there has been widespread, uncontrolled felling in the Baltics, especially in Latvia. Again, that is not the case in our experience. Felling laws are tight and are checked by police. Contractors and lorries need to have documentation to show timber is from a site with felling permission.

In Estonia, management is based on natural regeneration of native species in semi-natural woodlands. This is the case in Latvia too, but there are more plantations.

Of the three main species, pine and birch are light demanders and wind stable; spruce is shade tolerant but flat rooted and hence blows over quite easily. Underneath the birch, a crop of Norway spruce is often established, which becomes dominant when the birch is felled. Thus, a continuous cover is maintained for two rotations. Spruce is clearfelled when mature and the cycle starts again. To some extent the same happens with pine forests.

In April, the law changed in line with that of Estonia, allowing felling when the average diameter has reached a certain size. Failing that, the age rule applies. This makes for much better forestry and will mean a hike in forest property prices, as more timber is ready for immediate felling.

Rising efficiency

Prior to independence, the sawmilling industry was generally inefficient and small scale. Since 1991, investment and expertise have brought improvements, resulting in rising timber prices and, inevitably, sawmill closures.That process was faster in Estonia, as the Latvians took protective measures for their industry. Although mills are still being built in Estonia, 80% of timber is milled by the large modern plants, with surviving small mills focusing on niche markets. Competition for logs is fierce as there is an overall shortage. A surprising 30% of sawmill produce is used by the home market.

This process is now being repeated in Latvia. Massive investment is being made in modern sawmills and this summer, spruce timber prices rose by 20%.