Farm forests and rural livelihood in Finland

In the rural areas of Finland, a substantial share of incomes is derived from private farm forests. Regional variation, however, is great: significance of forestry on farms is higher in eastern than in western and southern Finland. The membership in the European Union (EU) is expected to alter rural economic development because of considerable negative effects on farm incomes. This study aims at evaluating the effects of Finland's EU membership on the significance of forests on farms in particular, and in rural economy as a whole. Five scenarios with different development of prices for agricultural and forest products are analysed by a linear programming model. Farms are assumed to practice a combination of activities to maximise farm revenue. The share of forestry in total farm revenue is likely to increase due to EU membership and the application of the Common Agricultural Policy. However, the increased significance of forests is only relative as a result of the considerable absolute decline in agricultural income. These results indicate that farm forestry will require increased attention and investment in order to maintain livelihood and economic activity in the mainly agriculture-oriented vast rural areas of Finland.