Hello,
Society wants forests to do everything. Store carbon. Protect biodiversity. Offer recreation. Filter water.
But who pays for it?
A new EU-funded study across 27 countries just answered that question. Over 80% of forest income still comes from selling wood. Carbon, biodiversity, and recreation? Less than 20%. Combined.
The gap between what society demands and what forest owners earn is growing. Policy ambition is rising. Revenue streams for ecosystem services are not.
This matters because it affects every forest owner reading this.
Here's what's moving European forestry this week:
🔍 The Big Story
EU Study: 80% of Forest Income Still Comes From Wood — The "Profitability Gap" Is Real
The European Commission published a study on February 4 covering forests in 27 European countries. The findings confirm what most forest owners already feel. Wood sales still pay the bills. Everything else barely registers.
The core finding: In over 80% of cases, wood production generates the largest share of forest income. Regulating services (carbon, water, soil protection) and cultural services (recreation, landscape) each contribute less than 20%.
Two Europes, two models: The researchers found two distinct management profiles across the continent.
The first is timber-focused management. This dominates coniferous forests in Central, Northern, and North-Eastern Europe. These forests earn well from wood sales. Income and profitability are high.
The second is multiple-services management. This appears in broadleaved forests in Western, Southern, and South-Eastern Europe. These forests sit closer to cities and Natura 2000 areas. Non-timber services contribute more. But total income is often lower.
The profitability gap: Here's the problem. Society increasingly demands regulating and cultural services. EU policy pushes for more biodiversity protection. More carbon storage. More public access. But the revenue from these services hasn't kept pace.
Private forest owners feel this most. They face rising expectations. They get limited compensation.
Why payments lag: Ecosystem service markets remain underdeveloped in most EU countries. Carbon credits exist but face credibility issues. Biodiversity credits are barely off the ground. Recreation generates income near cities, but not in rural areas.
The policy disconnect: EU strategy documents mention payments for ecosystem services. National forest programmes reference them. But actual, working payment schemes remain rare. Forest owners manage according to what pays. Right now, that means wood.
What this means for you: This study gives forest owners a powerful argument. When policymakers ask for more ecosystem services, the response is clear. Show us the revenue model.
If you attend policy meetings or write to officials, reference this study. It comes from the Commission itself. The data supports your position.
For forest owners already exploring carbon credits or biodiversity schemes, the study confirms you're ahead of the curve. These markets will grow. But they haven't arrived yet for most.
The practical takeaway: Don't abandon timber production for services that don't pay. But watch for emerging payment schemes in your country. When credible mechanisms appear, early adopters will benefit most. Source: European Commission - Environment
📊 Quick Hits
1. 🇸🇪 Södra Sells All Baltic Forest Holdings to IKEA's Parent
Sweden's largest forest cooperative just exited the Baltics completely. Södra sold its entire forest holdings in Latvia and Estonia to Ingka Group — the investment arm of IKEA's parent company. The deal is worth around €720 million.
Why Södra left: The cooperative represents over 50,000 Swedish family forest owners. Focusing on Swedish forests makes strategic sense. Baltic operations sat outside their core mission.
Why IKEA entered: Ingka Group has been expanding its forest portfolio. IKEA needs wood. Owning forests secures supply. The Baltics offer relatively affordable forestland close to Nordic markets.
The bigger picture: This deal shifts major forest ownership in the Baltics. A Swedish cooperative leaves. A global retailer's investment arm arrives. The trend of consolidation toward corporate forest ownership continues.
The takeaway: If you operate in Baltic timber markets, expect changes in harvesting and supply patterns as the new owner establishes strategy. Source: Lesprom Network
2. 🇮🇹 Italy's Woodworking Machinery Production Falls 10.4%
Italy is one of the world's top producers of woodworking machinery. In 2025, production dropped to €2.168 billion. That's 10.4% less than 2024.
Why it matters: Machinery orders are a leading indicator. When sawmills and furniture makers stop buying equipment, it signals weak confidence. They don't invest when they expect poor demand.
The European effect: Italian machines go everywhere. European sawmills, panel plants, and furniture factories rely on them. Less production means the industry is pulling back across the board.
The context: European construction weakness, stalling furniture production, and uncertain demand all contribute. The decline tracks with other weak signals across the sector.
The takeaway: Machinery investment will recover when downstream demand does. That recovery isn't here yet. Source: Lesprom Network / ACIMALL data
3. 🇦🇹 Tyrol Timber Prices Buck the Trend — Rise in January 2026
Good news from the Alps. Timber prices in Austria's Tyrol region moved upward in January. The regional roundwood price index (RUPI) rose notably, standing well above its baseline.
What drove it: Regional demand held firm. Tyrol's construction sector, while not booming, remained more active than in many other European regions. Alpine building traditions favour wood.
Why it stands out: Most European timber markets report flat or falling prices. Tyrol's increase is a bright spot. Regional markets can diverge sharply from continental trends.
The takeaway: If you sell roundwood in the Alps-Adriatic region, conditions are better than the European average suggests. Local demand matters. Source: Fordaq / Land Tirol Market Report
4. 🔬 Deep Learning Now Tracks Individual Logs From Stump to Mill
A new peer-reviewed study presents a system that identifies and tracks individual logs through the entire supply chain. From forest to factory. Using deep learning.
How it works: Neural networks analyze log characteristics — grain patterns, end profiles, bark features. Each log gets a digital fingerprint. The system follows it from harvest through transport to processing.
EUDR relevance: The EU Deforestation Regulation requires proof of legal origin. Paper documentation has limits. Digital tracking is harder to fake. This approach could strengthen compliance systems.
Published where: The study appeared in the International Journal of Forest Engineering. It's peer-reviewed. The methods are reproducible.
The takeaway: Timber traceability is moving from paper to pixels. Companies investing in digital chain-of-custody systems are preparing for a regulatory environment that demands proof, not promises. Source: International Journal of Forest Engineering
5. 🛋️ European Furniture Production Recovery Stalls in 2025
Eurostat data shows EU furniture production briefly improved early in 2025. Then it faded. By the second half, output was sliding again.
The pattern: January through spring showed hope. Seasonally adjusted production ticked up. But from mid-year, numbers reversed. The year ended with output still below pre-downturn levels.
What happened: Consumer spending on furniture stayed weak. Housing market slowdowns mean fewer new homes to furnish. High interest rates kept buyers cautious.
The wood demand link: Furniture production drives demand for panels, veneers, and solid wood components. When furniture output falls, the entire wood processing chain feels it.
The takeaway: Don't count on EU furniture demand to rescue wood markets in 2026. Recovery needs consumer confidence and housing activity to return first. Source: GlobalWood Market Report / Eurostat
📅 The Weeks Ahead
February 12–14, 2026: For Wood — Prague, Czech Republic
February 19, 2026: EU Carbon Farming Consultation deadline (last chance to submit)
February 24–27, 2026: DACH+HOLZ International — Cologne, Germany (roofing, framing, wood construction)
March 4–5, 2026: RFSI Europe — Brussels (regenerative food systems investment)
March 11–12, 2026: FEA Global Softwood Log & Lumber Conference — Vancouver
March 17–19, 2026: Wood Tech Expo — Warsaw, Poland
💡 One Thing to Try This Week
Check what your forest is actually earning — and from what.
The EU study found two management profiles across Europe. Which one fits you?
Fifteen minutes of clarity:
List your forest income sources from last year
Calculate what percentage comes from wood sales
Note any income from hunting, recreation, carbon, or subsidies
Compare your mix to the EU average (80%+ from wood)
Ask yourself: could you earn more from non-timber services?
Most forest owners will find wood dominates their income. That's normal. The EU study proves it.
But the exercise reveals something else. Are there untapped opportunities? A hunting lease you haven't explored? A carbon project worth investigating? Recreation income near an urban area?
You don't need to transform your forest overnight. But knowing your income profile helps you spot opportunities when they appear.
The EU wants more ecosystem services from forests. Sooner or later, payment mechanisms will follow. Forest owners who understand their own numbers will be ready.
Until Thursday!
Wish you all the best: Peter
P.S. What’s the biggest challenge you’re facing in forestry right now?
Hit reply and let me know — I read every message personally.
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