Natural products – source of significant extra income for forest owners and companies

In Finland, consumers have access to a steady selection of natural products that are produced from ingredients available under the Everyman’s Right, which guarantees everyone the freedom to roam and enjoy nature’s bounty. However, Finnish forests are also a source of a great number of natural products produced from ingredients that may not be collected under the Everyman’s Right. For forest owners, this constitutes a financial opportunity, but novel business models and tax reforms are needed.

There is a great global demand for chaga mushroom, sap, spruce shoots, birch leaves, blueberry leaves and blueberry shoots, but not enough products are manufactured to enter the markets.

“The reason is often very simple: forest and land owners don’t know that their forests are home to other things of value besides wood, and that there is a global demand for these products,” says Researcher Matti Vaara from the University of Eastern Finland School of Forest Sciences.

“In our LUMO-INKA project, we sought to create new growth potential through novel business models, and we also sought to find raw materials for new natural products. The project created new production and business models that are based on specific raw materials and target markets and that take into consideration the Finnish operating environment. These models could become a significant source of income for forest owners and companies refining raw materials.”

Researchers collected ideas for new products and services, and analysed their business potential. For the best ideas, new business models were created.

The production potential of the natural products for which the models were created was also studied, along with the related health and nutrition aspects, for example health statements.  The role of the University of Eastern Finland in the project was to evaluate and further develop the selected business models.

“The production of birch leaves or spruce shoots, for example, did not come up in the actual idea selection process,” Vaara says.

“When developing business models for companies specialising in the acquisition, pre-processing and final product refinement of raw materials in the natural products sector, and when assessing their feasibility, the question of securing the availability of raw material kept coming up.”

“This is why we felt that it is important for the natural products sector in general to try to develop the operating methods and revenue models of forest owners who are interested in natural products, as well as to find ways to make forest owners increasingly active in the production of natural products.”

In this project, the collection and production of birch leaves and spruce shoots were selected as examples, as they can be very easily utilised by forest owners. The production of many other products, such as sap or chaga mushroom, requires more careful planning and possibly some forest management measures as well.

Financial gain from young stands

According to Vaara, the collection of spruce shoots and birch leaves comes with many benefits for forest owners. In its most simple form, the production of birch leaves and spruce shoots does not require any production input from forest owners, as leaves and shoots can be collected from young stands during their management.

“For forest owners, young stands are financially unproductive, as revenue from the sale of wood isn’t possible until the first thinning, when wood is sold as pulpwood or wood for energy production. However, young stands need to be managed, i.e. early tending and pre-commercial thinning are required, and these are among the most significant obligatory costs for forest owners.”

“From young spruce and pine stands, it’s wise to collect birch leaves when the stands are managed, as that’s when birch will be removed in any case:  that's hitting two birds with one stone.”

Young stands get managed, revenue from the sale of birch leaves covers the stand management costs – and even brings extra income for the forest owner. It is also possible to collect leaves in years before the actual stand management.

“Of course, leaves can also be collected from felling sites in early spring.”

Supply doesn’t meet demand

The availability of raw material has always been a bottleneck for the anticipated growth of the natural products sector. Consumers want to buy clean and pure Finnish natural products that are known for their beneficial health effects. Currently, however, the supply doesn’t meet the demand.

“The easiest way to use birch leaves and spruce shoots is to use them as such for tea and other beverages. Young birch leaves can also be used in salads as such. When dried, they can be used in spices and green mixes. Indeed, birch is widely used in food, cosmetics, wellness and sauna products. Spruce shoot, on the other hand, is used to bring flavour to various syrups and sparkling wines. Birch leaves and spruce shoots are constantly researched to discover – and such discoveries have been made – new ingredients that could be used in wellness products and drugs. Nordic birch leaves are in particularly high demand in Central European countries.”

Natural products can also be considered in forestry planning

According to Vaara, it’s not enough to just develop production and business models for natural products. He says that there is still work to be done when it comes to agreement templates between forest owners and buyers of natural products, and new digital market places and platforms for buyers and sellers to meet one another are also needed.

“Here in Finland, we already have a platform for forest owners to facilitate the sale of wood and forestry planning, and this platform could also be expanded to cover natural products. There are also some other online market places. However, forest owners seldom have access to pre-processing facilities where they could dry, crush or freeze birch leaves or spruce shoots. Storage, including cold storage, is also often a problem. This is why it’s wise to have a buyer for the fresh products already before they are collected.

 “At the moment, it is important to raise awareness of natural products, their markets and the related business opportunities among forest owners. Consumers have been included in the concept design of natural products relatively well, and consumers are aware of natural products and their properties, Vaara says.

“Forest owners, however, have been left in the dark until recently. Now plenty of efforts are ongoing to activate forest owners. For instance, the University of Eastern Finland participates in a project (UUTU: Novel products from forests) that provides forest owners with forestry plans that take natural products into consideration and that place emphasis on the production of natural products.

Text: Matti Vaara and Marianne Mustonen
Photos: Raija Törrönen