Economic integration of urban consumer demand in rural forestry production: concerted European research action (COST)

March 19, 2002

Brussels, 18 March 2002

European Cooperation in the field of Scientific and Technical Research - COST Secretariat. Memorandum of Understanding for the implementation of a concerted European research action designated as COST Action E30 "Economic integration of urban consumers' demand and rural forestry production." Brussels, 15 March 2002 (document COST 228/02). Full text

Delegations will find attached hereto the text of the abovementioned Memorandum, signed in Brussels, on 6 March 2002 by Denmark, Finland and Greece, on 11 March 2002 by Poland, on 12 March 2002 by Italy and on 13 March 2002 by the United Kingdom.

The Signatories of this Memorandum of Understanding, declaring their common intention to participate in the concerted Action referred to above and described in the Technical Annex to the Memorandum, have reached the following understanding:

1. The Action will be carried out in accordance with the provisions of document COST 400/01 "Rules and Procedures for Implementing COST Actions", the contents of which are fully known to the signatories.

2. The main objective of the Action is to gain better understanding on the problems and possible solutions in forest based entrepreneurship leading to improved employment and income in rural areas at the European level.

3. The economic dimension of the activities carried out under the Action has been estimated, on the basis of information available during the planning of the Action, at Euro 7 million in 2001 prices.

4. The Memorandum of Understanding will take effect on being signed by at least five signatories.

5. The Memorandum of Understanding will remain in force for a period of four years, calculated from the date of the first meeting of the Management Committee, unless the duration of the Action is modified according to the provisions of Chapter 6 of the document referred to in Point 1 above.

A. BACKGROUND

Rural development. Rural areas across Europe are facing rapid economic changes. Due to diminishing prospects for financially feasible agriculture and lack of supplementing sources of income, many rural areas are often characterised by high unemployment, narrow occupational base, poor job creation as well as rapid emigration. Yet there is often a large and under-utilised wood and non-wood forest resource ­ including their use for small- and medium-scale processing, recreation and tourism as well as for amenity purposes ­ that could be utilised more in job and income creation in rural areas. This valuable forest resource and its variety of local uses are referred to in this Action as rural forestry production.

Urbanisation. Because of urbanisation and more rapid economic growth in urban than rural areas, the highest purchasing power for forest products and services are increasingly found far from the place of products' or services' origin. To increase the use of wood and non-wood forest resources it is therefore essential to meet the demands of the urbanised part of the population. In this Action this aspect is described as urban demand, and it addresses the importance of understanding the characteristics of demand of urbanised people. If this demand can be transformed to new entrepreneurship close to the origin of forest resources it would clearly benefit employment and income in rural areas.

SME in local wood and non-wood processing. The role of enterprises and entrepreneurship in economic development is likely to increase in the future because of the limited possibilities to expand public sector activities in most European countries. Especially in the forest sector, small- and medium-scale enterprises (SMEs) play a central role in the employment of people in local processing, recreation and forest-based tourism activities. SMEs have an advantage in being able to use local knowledge and locally available material and resources in their production. Furthermore, business opportunities in local forestry-wood-processing-chains, if innovative and competitive also in exogenous markets, can bring the highest added value to rural areas and closer to the origin where trees are growing. Essential for the success of local forest-based enterprises e.g. wood and non-wood processing industries is to find suitable markets niches, build new innovations and have good business management competency.

Small-scale forestry. Forests provide a fundamental basis for ecologically, socially and economically sustainable development in all European countries. At the centre of the actions supporting sustainable forest management are the decisions of approximately 15 million small-scale forestry holdings, covering more than 30 million hectares of land in current EU-member countries, and 7 million hectares in Central and Eastern European Countries (CEEC). These forests provide the substantial share of the resources used for employing more than 6 million people in forestry and wood processing industries in above-mentioned countries. Among the many problems in small-scale forestry is that often the wood growth is unavailable, for example, for local wood processing industries. This may be, for example, due to low economic importance of forestry to the owners or due to the problems of access to the markets.

European dimension. Small-scale forestry holdings are elementary suppliers of raw material for local SME wood processing industries and a basis for many existing forest based services.

Currently, the practises and problems of local forestry-wood-processing-chains, as well as for the means for bringing urban demand on non-wood forest products and services, and their rural supply closer together, vary between forest rich areas, and areas with a higher protective role of forests, for example, against land degradation. A particular problem is different property rights systems that we find in Europe related to the use of services and non-wood products of the forests; different regulations and different level of "privatisation" of the forest resources have direct influences on the possibilities to develop market niches. Because of the strong emphasis on privatisation it is likely that small-scale forestry will gradually increase in importance in many of the EU Candidate countries, as well as in other CEE countries. Private forest holdings in these countries will perhaps face bigger problems than their counterparts in western European countries because of higher step to integrate their production into globalised markets.

Action rationale. To economically integrate especially urban consumers' demands and the supply of various forestry products and services is a promising means to improve business opportunities, employment and income in rural areas. The COST Action will focus on the problems and possible solutions on forest based rural entrepreneurship leading to improved employment and income at the European level. The Action will provide important information for the forest sector in relation to future structural funding schemes where forestry is closely connected to rural development objective.

Why a COST Action? COST provides an excellent framework for bringing added value to national research on forestry, forest sector enterprises in wood and non-wood processing and rural development. The method of work in the Action is networking and the scope of the work to increase the know-how and knowledge base on forest based entrepreneurship with analyses that are based on national research experiences. Thus, the COST Action provides a good opportunity to co-ordinate national research and complement the work conducted under European Union RTD Framework Programme e.g. EU/FAIR Multifunctional Forest for Rural Development (Multifor RD) ­ project, EU/FAIR Niche Markets for Recreational and Environmental Services (RES) ­project and EU/FP5 Evaluating Financing of Forestry in Europe (EFFE) ­project and EUREKA ­programme (e.g. EUROFOREST ­project). It can be expected that with this COST Action new research issues will be elaborated e.g. for European Union RTD Framework Programmes....

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