The chairman of the board of the joint-stock company “Latvijas valsts meži” (LVM) Peteris Putniņš has resigned, reports TV3, citing unofficial information.
Putniņš announced his resignation at the LVM shareholders' meeting on October 16 of this year. The reason for the resignation is likely political pressure — the departure may be related to the government's decision to accommodate the woodworking companies that signed three-year contracts at relatively high prices at LVM auctions.
TV3 notes that the board led by Putniņš was previously offered to review the concluded contracts and reduce prices; however, LVM refused to do so, stating that it would lead to the squandering of state funds.
Despite this, the government under Evika Siliņa (New Unity) made a decision favorable to the woodworkers, even though in previous years the industry had shown record profits.
TV3 reminds that in 2023, the largest woodworking companies began to sound the alarm, stating that due to Russia's war against Ukraine, construction activity in the region had slowed down, leading to a decrease in demand for lumber and falling prices. This particularly affected large exporters who had previously won three-year contracts for the supply of saw logs at high prices at LVM auctions. Industry associations appealed to LVM with a proposal to establish a “competitive price,” but LVM management refused, considering it not only impractical but also illegal.
In a response letter from LVM, signed by Putniņš and other board members, it was noted that such a decision would reduce LVM's revenues by millions of euros and would mean the squandering of state funds. This should also be viewed in the context of the European Union agreement, as such a price reduction could be seen as state aid distorting competition.
However, at the end of 2023, Minister of Agriculture Armands Krauze and then-state secretary of the ministry, as well as the state's representative as a shareholder of LVM, Raivis Kronbergs, presented the government with an informational report on the reduction of factors negatively affecting the competitiveness of the Latvian woodworking industry. The document created the impression that an emergency situation had developed in the industry: Latvian sawmills were losing to competitors from Scandinavia due to high resource prices, and to stabilize the market, LVM should provide discounts on already concluded long-term contracts.
The Ministry of Environmental Protection opposed this, pointing out that the problems faced by woodworkers had only been observed for one year, while in previous years, forest product exporters had received record profits — 201 million euros in 2021, 102 million euros in 2022, and also emphasizing that the expected crisis was still only a forecast. Furthermore, there were concerns that price reductions on long-term contracts would only support large woodworkers, not the entire industry.
Siliņa, like Krauze, denied in an interview with TV3 that she had met with specific businessmen from the woodworking industry. However, the prime minister did not respond as to why the state refused 30 million euros in favor of large woodworkers rather than the entire industry, despite the obvious need for savings by the end of 2023.
Putniņš's term as chairman of the LVM board was set to expire on July 28, 2027. It was previously reported that in 2024, LVM had a turnover of 586.129 million euros, while the company's profit decreased by 32% to 150.131 million euros.
