Sawlog Market Assessment

FIRMA is a five-year, $20 million project that began in September 2009 and is funded by USAID and Sida. The purpose of the project is to support enterprise competitiveness in selected value chains of the tourism, wood, and light manufacturing sectors of BiH, in the process advancing the country’s ability to meet the Copenhagen Economic Criteria for accession to the European Union. To support sustainability, the project works primarily through a group of key local implementing partners, known as the “FIRMA Consortium”, who cover all regions of the country.

The goals of USAID and Sida for FIRMA are ambitious and transformational, and therefore require wide impact – in product design and quality, in ways of connecting to markets, in expertise of workforce, and in investment attractiveness. FIRMA's strategy is directed toward these systemic objectives.

The FIRMA workplan is defined at the private sector value chain level. Implementing partners, called “Value Chain Facilitators” (VCFs), organise stakeholders first to identify and prioritise competitiveness obstacles through value chain analysis, and then to originate and manage discrete activities to address these obstacles. FIRMA supervises and supports these activities, providing strategic and operational guidance, expert technical assistance, and grants from its $3 million Small Grants Fund. In order to maximise scale and impact, FIRMA works closely with other donors and local government agencies that provide development assistance programs consistent with FIRMA's objectives – so-called “collaborating implementers”.

FIRMA is implemented by Cardno Emerging Markets USA, Ltd. (Arlington, VA), with several consortium subcontractors and 12 regional and local economic development agencies in BiH. As a subcontractor, ORGUT carried out consulting services to FIRMA specifically within the wood value chain. The Wood Processing Sector support improvements of value-added wood products in product design, product quality and safety, application of up-to date technologies to enable efficient, flexible, and exact product fabrications, and workforce skills and capabilities.

In support of its principal implementing partners, FIRMA encourages the development and implementation of strategies and action plans that improve wood sector product and productivity and expand market connections. FIRMA encourages the formation of clusters, micro-clusters, and collaborative producer sales agencies to expand the number of BiH SMEs benefitting from the project, to widen the range of offered wood products, and to more effectively penetrate global markets. FIRMA also works towards the adoption of a comprehensive industrial development strategy for the wood industry in BiH that supports expansion of exports and employment while preserving forest sustainability. Maximizing the sustainable supply of sawlogs from the BiH forest is critical to the competitiveness of the country’s wood processing sector, a principal target of FIRMA’s support. While some progress has been made in recent years in forest governance and management, partly due to the support of USAID, the World Bank, and other donors, many problems remain. These include, among others:

• Inadequate harvested quantities of higher-quality sawlogs
• Inefficient national sawlog market fragmented by entity and cantonal boundaries as well as poor internal transport infrastructure
• Favoritism for certain sawlog buyers, who can obtain priority access to material under subsidized conditions
• Importation of sawlogs, given under-exploitation of sustainable allowable cut
• Lack of forest certification for about half of the country’s forested area
• Underinvestment in forest roads
• Inconsistency in sawlog sales and pricing practices; limited availability of long-term purchase contracts
• Inefficiency in business management in state-owned forest management companies
• Lack of shared forestry policy

The objective of the Sawlog Market Assessment carried out by ORGUT was to comprehensively assess, analyse, and report on the sawlog supply and demand situation in Bosnia & Herzegovina, including critical priority problems and recommendations. Throughout, problems were identified and prioritised with reference to the business competitiveness needs of the downstream BiH wood processing private sector, with due regard to environmental sustainability, preservation, and shared forest use.