Wood sales

GDF was a monopoly in wood market before 1990. Removal of the custom barriers led to increased imports and consequent drops in the wood prices. The situation was aggravated by a recession in the economy, then by economic crises both national and international. GDF’s Revolving Budget started giving deficits in 90s, to the extent to reach 100 million dollars in 1999. One of the reasons of this deficit is the high production cost (see Ann.16) and declining sale prices. The production cost has been high because of the high labour cost, overheads, subsidies and harsh geographic conditions that increase skidding and transportation costs. Cuts for various funds are also another important factor that inflates production cost. Tariff price, one of the components of the production cost, is kept low, however, since this price is an index for various subsidies given to local dwellers.

From 1999 and then on, GDF has taken tough austerity measures to reduce the production cost. The deficit was narrowed at the beginning of the Century and then with the improvement in the market prices and increase in demand for round wood, budget surpluses achieved in 2002, 2003 and 2004. (See Ann.13)

Some of the wood sales are made through allocations, State Economic Enterprises and private paper, chip and wood based panel industry are obtaining their needs through the allocations. Sale prices are decided by GDF taking into consideration the latest averages of auction sale prices.

Subsidized sales are also affects the market. Based on Forest Act, GDF gives 150.000 m³ timber and around 4 million steres to forest villagers at very low prices each year. It also sells around 400.000 m³ timber at the price 20 % lower than its market price and 2.2 million steres fuel woods at cost price to the villagers and ORKOOP.