On Wednesday, April 8, 2026, the Ministry of Agriculture (ZM) informed the public about the results of an internal review concerning reports from the State Chancellery’s (MK) established Review Commission dated January 20, 2026. The review focused on the preparation and execution of informational reports from the MK on December 19, 2023, regarding mitigating factors impacting the competitiveness of Latvia’s wood processing industry, and from June 25, 2024, concerning the results of price corrections implemented in deliveries to AS “Latvijas valsts meži” (LVM) to stabilize the wood market.
Government Action on Wood Prices Deemed Justified
The main conclusions of the review state that the government’s decision to stabilize wood prices in 2023 was justified, based on the operational data available at the time, and provided timely assistance to the struggling wood processing industry. Stabilizing wood prices in 2023 did not result in losses for the state; in fact, LVM paid 52 million euros more in dividends to the state budget in 2024.
The review also found that disciplinary proceedings will be initiated against responsible officials to determine why LVM’s opinion, submitted to the ZM on December 7, 2023, regarding the situation with wood prices in 2022 and 2023, was not included in the information submitted to the MK’s Review Commission earlier this year. This omission led to a number of inaccurate assumptions.
Review Focused on Data and Impact
The Review Commission’s task was to evaluate the factual basis for the preparation of the informational reports, the data and methodology used, the impact of the decisions made on the industry, and the validity of the conclusions contained in the State Chancellery’s report. It also assessed the involvement of officials in the development and adoption of these documents.
The review found that the informational report was developed in response to repeated submissions from industry companies and organizations, beginning in late 2022, requesting a one-time correction of LVM’s spruce sawlog prices to align them with the real market situation. Industry participants at the time pointed to a significant problem: the mismatch between prices applied under LVM’s long-term contracts and the current market situation.
According to Zemkopības ministrs Armands Krauze, “The Commission concluded that the preparation of the informational report was based on a widely identified industry problem that had a direct impact on the competitiveness of the wood processing industry. ZM experts also concluded that there were no signs of state aid in stabilizing wood prices, so the stabilization did not distort competition. This measure was essentially stabilizing the economic situation and maintaining the competitiveness of Latvian companies by correcting the price mechanism in line with market conditions. After stabilizing wood prices, LVM paid 52 million euros more into the state budget.”
The review also noted that a KPMG Baltics assessment commissioned by the ZM indicated that the price mechanism for longer-term contracts has limited flexibility during periods of rapid market fluctuations and poses a potential risk that fixed or slowly adjustable price conditions could temporarily lose touch with the current market situation, increasing the risk of contract execution for both clients and LVM.
“During the review, the commission found that, contrary to LVM’s previous claim that the company had not been informed about the preparation of the informational report to the government regarding wood prices and had not been involved in this process, LVM had already submitted its opinion to the ZM on December 7, 2023, regarding the situation with wood prices, stating that the price correction should apply to all companies with which LVM had long-term contracts for wood procurement. For reasons currently unknown to the ZM Service Review Commission, responsible officials did not submit this LVM opinion to the MK Service Review Commission established at the beginning of the year. Disciplinary proceedings will be tasked with finding out why officials provided incomplete information to the MK Service Review Commission. We will also forward this information to law enforcement agencies,” informed Zemkopības ministrs Armands Krauze at the press conference.
Frequently Asked Questions
What prompted the internal review?
The review was prompted by reports from the State Chancellery’s Review Commission regarding informational reports concerning the competitiveness of Latvia’s wood processing industry and price corrections implemented by LVM.
What were the key findings of the review?
The review concluded that the government’s decision to stabilize wood prices in 2023 was justified, did not harm the state financially, and resulted in increased dividends from LVM. It also identified issues with internal communication regarding the sharing of LVM’s opinion with the Review Commission.
What actions will be taken following the review?
Disciplinary proceedings will be initiated against responsible officials to investigate why LVM’s opinion was not included in the information provided to the State Chancellery’s Review Commission. The information will also be forwarded to law enforcement agencies.
Considering these findings, what steps might be taken to improve transparency and communication between LVM, the ZM, and the MK in future decision-making processes?
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