Development of Lithuanian state forestry sector 1990-2008: New stage of evolution needed?

This paper discusses tendencies of forest management examples in the state forests of EU countries. In all the cases forest management is organised on the principles of market economy and equity of all types of forest ownership, creating equal legal conditions both for the state and private forestry sector, and securing continuous supply of ecological, economic and social functions from the forests. This model allows economically effective management, maintaining relatively strong influence of the state over forest resources providing not only for economic but also for environmental and social functions as well. The main regard of the paper is given to the size of forest enterprise. In several EU countries centralised companies responsible for management of all state forests are established. Similar evolutionary stages of Lithuanian state forestry sector development are proposed. Today the existing 42 state forest enterprises should be centralized in a first stage into 9 regional state forest centres which in a following second stage could remain as regional units of one centralised state forest company. Increase in size and centralisation has pros and cons. Such a forestry company could be attractive to large timber processing industries and increase economic efficiency in the sector. This study analyses, how such a centralisation may create a danger of monopolistic conditions in the round wood market and eliminate principles of fair competition.