Public forestry companies in Bosnia and Herzegovina annually cut millions of cubic meters of timber and generate hundreds of millions of marks in revenue, but the benefits to citizens vary significantly depending on the entity. While 48.4 million KM in forest fees was collected in the Republika Srpska in 2023, in the Federation of BiH, this amount was only 15.8 million KM.
An analysis by Transparency International in BiH shows that in 2023, Republika Srpska and the Federation of BiH had almost the same volume of logging, a similar number of employees, and comparable total revenues, while the collection of forest fees in RS was more than three times higher than in the Federation of BiH.
These differences do not arise from the amount of forest cut or differences in the quality of forest products but are a consequence of the lack of a legislative framework and a fragmented management system. For example, in the Una-Sana Canton, the fee for using state forests is 9% of the revenue from the sale of timber at the stump price, of which 2% goes to the cantonal budget, while 7% of the stated amount is paid to the account of the municipality where the timber was cut. On the other hand, the Central Bosnia Canton charges 4% for this fee, of which 1% is collected by the canton and 3% by the municipal budget.
In comparison, in Republika Srpska, this fee is 10% of the revenue from sales on the truck road – which is higher than the stump price because it includes, among other things, the costs of extraction from the forest and transportation to the place of sale – which means that in this entity, the basis for calculating the fee is higher and the method of calculation, collection, and distribution is uniform for all municipalities.
Since 2009, the Federation of BiH has not had a forest law, which has forced cantons to enact their own laws that treat this area differently, leading to weak control, uneven amounts, and methods of fee collection, as well as different models of planning the use of these funds. As a result, citizens of FBiH derive significantly less benefit from forest exploitation compared to RS.
In addition to these differences, the analysis showed worrying trends in forest sustainability, with forestry companies cutting 3.78 million cubic meters of forest, achieving a logging volume of 77% of the planned, while only 51% of the planned area was reforested in 2023. Furthermore, plans for the construction of forest roads, which are crucial for successful and efficient exploitation, accessibility, and forest growth and cultivation, are realized at an average rate of around 59%.
These data indicate that forests are managed with a short-term focus on exploitation, logging, and revenue generation, while long-term sustainability and forest cultivation are systematically neglected.
High revenues, minimal profit
Despite total revenues exceeding 470 million KM and over 9,000 employees, forestry companies in BiH achieve a symbolic profit, which amounted to 3.83 million KM in 2023. When these data are compared with the number of employees, it turns out that public forestry companies achieve only about 400 marks of profit per worker annually.
The serious inefficiency in managing one of the most valuable natural resources is also evidenced by the fact that companies managing forests achieved only 0.04 KM in profit per cubic meter of timber cut in 2023.
Debts, receivables, and extreme price differences
The analysis also shows high amounts of uncollected receivables from customers, which amounted to 27.73 million KM in 2023, while receivables older than a year, whose collection is unlikely, reached 15.88 million KM. In some companies, doubtful receivables older than a year make up more than half of the total customer debts, raising questions about the responsibility of those who allowed the forest to be cut, delivered to suppliers, while delaying the collection of receivables to the detriment of the public company.
A particular risk is posed by the way forest product prices are formed, which vary to an extent that is difficult to explain by market influences. For example, buyers in Posušje paid 152 KM per cubic meter of first-class oak. while the same product was sold by JP ŠUME TUZLANSKOG KANTONA DD KLADANJ for 567 KM/m3, which is a price difference exceeding 250% at a distance of just over 200 kilometers.
Transparency International attempted to obtain data from public companies on forest product buyers, the quantities they purchased, the values of concluded contracts, and the manner in which timber delivery was contracted, to assess whether it was a matter of poor management or favoritism towards certain business entities. However, only four public companies (JP Šume TK dd Kladanj, JP ŠGD šume Hercegovačko-neretvanske doo, Šumarstvo Prenj dd Konjic, ŠGD ŽZH doo Posušje) provided data on buyers and delivered amounts.
Lack of transparency hinders oversight
Such a lack of transparency prevents adequate insight into the distribution of forest assortments and the assessment of pricing policies, as well as a broader view of the management of forestry companies.
The low level of transparency is further illustrated by the fact that only 34% of key documentation for the period 2022–2024 is available on the official websites of forestry companies, and only two companies published a work report for 2024, while more than half do not publish the price lists by which they conducted sales and deliveries to customers.
As previous analyses have shown that over 80% of directors of forestry companies and forest managements have confirmed political connections and that employment is allowed without competition in these companies, and conflicts of interest are tolerated, it is clear that these companies are becoming branches of political parties, where resources are used for party employment.
The lack of transparency in the sale and distribution of timber assortments, the unavailability of price lists, and the inability of public control, as well as the low level of efficiency in work, further confirm suspicions that forest management in Bosnia and Herzegovina is unsustainable, driven by short-term interests and exploitation, and aimed at favoring privileged buyers, instead of serving the general social interest.
To eliminate the observed systemic deficiencies, it is necessary to establish a unified forestry information system that would enable standardized data collection and processing and define clear technical standards for geolocation marking of logging areas, which must comply with the requirements of the EU Regulation on preventing deforestation (EUDR). Additionally, inspection oversight and control mechanisms must be significantly strengthened through clear procedures for verifying the origin of timber, and the oversight process must allow for the participation of the non-governmental sector as well as professional associations, which can offer an adequate level of public interest protection.
Without depoliticizing management, enacting forest laws in the Federation of BiH, and introducing unified rules for collection and reporting in line with European rules and standards, forests in BiH will remain a resource under political control, jeopardizing long-term sustainability.
Data on the operations of public companies, the collection of forest fees, and the general benefits from forests are also available through the register concessions.transparentno.ba, which TI BiH has enhanced with new data on forest management in Bosnia and Herzegovina.
