Sunday , 21 July 2024
Home Global Economy "Firewood is the new toilet paper"
Global Economy

"Firewood is the new toilet paper"

Niels Klahold was looking forward to being able to serve all his orders in a relaxed manner this year. He has been selling firewood for the Kassel area with his family business in Vellmar for more than 20 years. But now Klahold no longer feels like answering the constantly ringing phone. Because he has to put off more and more customers. And because more and more customers are reacting in panic.

The demand for firewood has increased anyway since the Russian invasion of Ukraine – and since last week it has developed from a mass product to a scarce commodity. Since Federal Economics Minister Robert Habeck warned of a harsh winter in view of the reduced gas supplies from Russia, demand has increased enormously, says Klahold. He gets up to 50 calls a day from people who wanted to arm themselves with firewood for the harsh winter announced by Habeck.

Stores of the dealers as good as empty

"Firewood is the new toilet paper," says Klahold. More and more people would want to hoard it. "But we simply can't meet this demand anymore, we don't get any more supplies ourselves." There are many reasons why the storage areas of the firewood dealers are almost empty and the production of new goods cannot be realized in the short term, according to the Industrial Association for Household, Heating and Kitchen Technology (HKI) from Frankfurt and the Federal Association of Firewood Trade and Firewood Production (BuVBB).

Usually ordered long in advance

"On the one hand, this is due to the procurement of the raw material from the forest, since this is usually ordered months in advance," said Klaus Egly, the first chairman of the BuVBB. "On the other hand, existing raw materials cannot be produced at short notice and in infinite quantities." Short-term deliveries are therefore almost impossible. The logical consequence: what is becoming rarer and more sought-after is also becoming more expensive.

"With a decent margin, we would have to charge between 160 and 180 euros per bulk cubic meter," says timber merchant Klahold, who currently charges 130 euros for a bulk cubic meter of dry wood. Last year, the same amount cost 80 euros.

Incidentally, it is not a logical consequence that Klahold would earn more as a result. As a team, they had "serious thoughts" about how to set their prices, he says. It is clear that they would have to pass on their increased costs for the raw wood, its production and transport to the customers. "But we also see ourselves in a social situation," says Klahold, "we want to provide people with firewood."

Even if the margin for him is falling despite rising sales prices. Klahold is no longer taking on any new customers. He tries to allocate the wood he still has and distribute it fairly. Regular customers who used to order seven to eight meters of firewood, for example, now get five meters.

Impact stop as a "big problem"

"The price increase is essentially based on the fact that firewood is a so-called substitute good and can replace oil or gas," says Frank Kienle, Managing Director of the HKI. And since the prices for oil and gas have risen massively, the suppliers have followed this development and also increased the prices for firewood. "But since one cubic meter of hardwood has the calorific value of around 200 liters of heating oil, firewood is still around 40 percent cheaper than gas and heating oil at the current price level," says Kienle. Which explains the sudden popularity of the commodity.

Klahold explains that it will remain scarce with the so-called beech moratorium of Hessenforst, the owner of the largest forest areas in Hessen. The Hessian Ministry of the Environment had issued it with the requirement that the management of more than 100-year-old beech stocks in certain areas is only permitted if it serves to ensure road safety.

"This impact stop is a very big problem," says Klahold, who is a forester himself. For him and everyone else who works in and with the forest, nature conservation is a high priority – "but this must not lead to entire areas being set aside and the beeches there dying uselessly."

Even trees that have been uprooted by the wind should no longer be felled, nor diseased trees, so-called calamities. "That puts enormous pressure on the available quantity," says Klahold. He therefore demands that due to the current situation, a suspension of the beech moratorium should be considered. "At least wind throws and calamities must be allowed to be beaten."

Hessenforst wants to increase quantities

"Basically, we have enough firewood," says Benjamin Krug, head of raw wood sales at Hessenforst. However, the drought damage of recent years in combination with the beech moratorium has limited the quantity, while demand has increased rapidly. Hessenforst has the task of protecting the forests, of being more careful with beech stocks so that more forest does not die after the damage caused by the drought.

From autumn, when the vegetation phase is over, maintenance programs are carried out in young and middle-aged stands, i.e. thinning wood is removed. "From September we will try to increase the supply," says Krug. But it also depends on a clever distribution of stocks, firewood has to be allocated. "With ten meters, every household can get through the winter well," says Krug. "What we want to prevent are hamster purchases." Unnecessary stockpiling would push the market even more.

Overexploitation in Romanian national parks

Niels Klahold checked off his calculations long ago. "Before the corona pandemic and the Ukraine war, we felt economically able to subordinate everything to nature conservation," he says. Only nobody considered where firewood should come from if this plan no longer works. This is now leading to dubious suppliers selling wood that comes from overexploitation, for example in Romanian national parks.

"Our forests are also subject to economic aspects," says Klahold, "not just romantic ones." If this weren't considered, if the population weren't provided with the necessary resources, "then we'd run into one of the greatest wood shortages since the Middle Ages."

Leave a comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Related Articles

Global Economy

Spotlight on 2023: S&P 500 and the Significance of the 4400 Level

In our past exploration of the financial landscape of 2023, we delved...

Global Economy

AI and Data Analytics Drive Efficiency in Money Laundering Detection

BIS Innovation Hub Turns to Tech for Money Laundering Detection The BIS...

Global Economy

Russell 2000 Gains Momentum as Tech Stocks Outperform Value

Tech stocks have dominated the equity markets in recent months, surpassing value...

Global Economy

Crypto Exchange Bybit Announces Exit from Canadian Market Amid Regulatory Changes

Regulatory Shifts Prompt Bybit's Strategic Withdrawal from Canadian Crypto Market