Drvosječa Company Warns Authorities: Ban Firewood Exports!

(Patria) - The company DRVOSJEČA, which has been operating in the firewood and energy sector in Bosnia and Herzegovina for 19 years, has sent an alarming letter to authorities at all levels in BiH due to the increasingly serious situation in the market and the abnormal rise in firewood prices. The letter was sent to the Chairman of the Council of Ministers of BiH Zoran Tegeltija, the Minister of Foreign Trade and Economic Relations of BiH Staša Košarac, the Minister of Trade of FBiH Zlatan Vujanović, the Minister of Energy, Mining and Industry of FBiH Nermin Džindić, the Prime Minister of FBiH Fadil Novalić, the Prime Minister of RS Radovan Višković, the Minister of Energy and Mining of RS Petar Đokić, and the Minister of Economy and Entrepreneurship of RS Vjekoslav Petričević.

"What is currently evident in the European market for biomass and firewood is a huge shortage, which our company has repeatedly informed the public about through various media. This shortage was initially caused by the coronavirus pandemic, which hit our country at the beginning of 2020, after which disruptions in supply chains began to turn into disruptions in firewood prices for end customers - consumers. Prices, due to the factual increase in the cost of numerous factors necessary for the production of all types of firewood, including electricity, fuel, steel, and many other components, experienced an expected and, if one can say, normal increase, which can be roughly measured at a uniform rate of +20% for all types of firewood. Residents of our country expected such an increase, in line with the generally accepted fact that every aspect of life experienced a price increase at that time.

Price changes started to rise again at the end of February of this year, 2022. The events in Ukraine and their conflict with the Russian Federation have, from that period until today, led to a huge disruption in the supply chain of European Union countries with energy sources such as gas, but also all types of firewood - wood, pellets, briquettes, and coal. The reason for this abnormal increase in firewood prices, which at the time of writing this letter has reached a percentage difference of +100% compared to last year's prices with a tendency for further growth, is the fact that in previous years, European Union countries primarily met their firewood needs from Ukraine, which, like our country, is abundantly rich in forests and thus in products from the energy and biomass sectors.

The market of European Union countries, in the current absence of previous suppliers from Ukraine due to disrupted transit routes, has directed its procurement goals towards another European country rich in forests and biomass - Bosnia and Herzegovina. Our company has witnessed an enormous number of inquiries for firewood offers from all EU countries in the previous period, and dozens still arrive daily at our email addresses. Although guided by the idea and desire to first supply the domestic market with firewood and export the surplus, which is always available thanks to our natural wealth, we ourselves are currently among those who have directed their production and capacities towards export in quantities equal to 90% of their entire production, and many have directed even 100% of their entire production towards export. The official data is that currently, we, the businessmen from the BiH market in the firewood and energy sector, export an average of 30-50 truckloads of wood daily, which is equivalent to approx. 2000 cubic meters of wood, and 20-30 truckloads of wood pellets, which is equivalent to approx. 500-700 tons. Considering these official figures, the impact on the BiH market is enormous and leads to the fact that there will not be enough of the mentioned firewood for the needs of the Bosnian-Herzegovinian market. This is due to the fundamental economic assumption that the price of a certain commodity is formed based on supply and demand for it, and given that the supply of firewood as a whole is currently significantly weakened - an enormous increase in the price of all types of firewood is inevitable, and therefore it is more profitable for the businessman, i.e., the company, to export firewood from our market to foreign markets than to sell it on the domestic market. All this has led our economy to turn its products primarily to foreign markets.

One of the most important market segments in the firewood market are public procurements of state institutions, which in the past year 2021 announced public procurements for firewood worth over 2,550,000.00 KM. These institutions include schools, hospitals, and all other public institutions. Considering this, we inform you at this time that the mentioned abnormal price changes are significantly hindering the public procurement process this year due to the inability to predict firewood prices even 7 days in advance. Dozens of public procurements are canceled daily due to "unrealistic prices" from bidders, all due to the fact that the budgets of public institutions have remained the same as last year, while firewood prices have drastically changed.

The solution that public institutions are currently applying is to procure a significantly smaller quantity of firewood for the same amount of funds as every year, and for comparison - this year, for the same money, they can procure half the quantity they could last year. This solution is considered temporary, as it will ultimately lead to a quantitative shortage of firewood, most likely during the coldest periods of winter, and thus to cold premises in institutions. As our economy is currently trying to respond to the overwhelmingly huge demands from foreign countries for firewood, which will certainly intensify further, considering the increasing tensions and imminent announcements of a complete halt in gas supplies to EU countries, for which firewood is the only alternative for their residents, our country has already begun to enter a crisis in which, despite our enormous natural wealth of both wood and coal, we will most likely face winter with cold homes for the vast majority of citizens, as well as cold schools, public institutions, and hospitals. As a socially responsible company, and considering all of the above, and the increasing proximity and certainty of the scenario of facing winter in cold homes and institutions, we kindly ask you to make a decision at an urgent session of the Council of Ministers as soon as possible to suspend the export of all types of firewood outside the country, except for cases where the domestic market is supplied, in order to protect the domestic economy, the domestic economy, and ultimately - the absolute protection of the domestic population. This action will certainly normalize the situation in the domestic market, and residents will, as in previous years, again have firewood at affordable prices and in sufficient quantities.

We kindly ask you to consider this letter with urgent attention, as the situation in the domestic Bosnian-Herzegovinian market is changing from day to day, but unfortunately - to the detriment of the residents and their budgets. We firmly believe that you, the recipients of this letter, can very quickly resolve the alarming situation in this market and thus help the residents of Bosnia and Herzegovina.
Our company, which has decades of experience as a leader in the firewood market of Bosnia and Herzegovina, is at the disposal of all representatives of state, entity, cantonal, and even local authorities for any form of assistance from our sector. Do not allow us to face winter in cold homes in a country that can certainly be energy independent in the region," the appeal states.