Viktor Smal: We're Developing Europe's Best Timber Traceability Chain

Viktor Smal: We're Developing Europe's Best Timber Traceability Chain

Viktor Smal has worked at the State Forest Resources Agency for over four years. He initially served as the Deputy Head for Digital Development, Digital Transformation and Digitalization, and has been leading the Agency since May 2023.

Before joining the Agency, you worked in the private sector and started your own business. Have you been able to use that experience in public service?

The corporate sector, entrepreneurship, and public service are all different, but they complement one another, giving you a comprehensive view of the world. In the corporate sector, as an employee, you understand your tasks and that your bonuses are tied to your performance. This creates a clear incentive. It's a foundational level of motivation, so to speak.

Running your own business fundamentally shifts the focus. It makes you realize that the responsibility you felt in the corporate world doesn't compare to the level you feel as an owner. You have to care not only about yourself but also about other people. You become more meticulous about your time, ruthlessly discarding tasks that don't lead to results. You become more efficient and focused on outcomes.

Public service is a completely different world. Getting results is significantly harder than in business or the private sector. All processes have greater inertia. Bureaucratic chains are long and can easily break without yielding the necessary results. But combining experience with the desire to truly make a difference allows you to achieve goals even here. Successfully implemented, complex projects are incredibly motivating.

The problem with public service is that it’s often staffed by people who have a very vague idea of what a "result" is. They are convinced that it's more about the process.

I think differently. That's why in my current position, I also work for results—and I demand the same from my colleagues. This is exactly the business experience I'm applying here. My principle is that at the end of the day, you should be able to answer the question, "What have you done?" not "What have you been doing?"

Let’s ask you that question now: What have you done during your time at the Agency?

I actually started working on changes in the forestry industry even before joining the civil service. In 2015, I founded and developed the IT agency "WebAnatomia," which focused on web production. Our main clients were Ukrainian pharmaceutical companies and regional exchanges that sold timber at the time. "WebAnatomia" even created one of the first online auctions for the sale of raw timber in Ukraine. Today, this process is centralized through exchanges licensed by the National Securities and Stock Market Commission, but when I first got involved in the forest industry, it was a regionally fragmented processes.

When I became Deputy Head for Digital Development, Digital Transformation and Digitalization, I already understood the reforms the industry needed. My main goal was to create the best timber traceability chain in Europe.

Have you achieved that goal?

To avoid overpraising myself, I'll say: we’re on our way! It’s a long process, but we’ve already completed the most crucial stages.

What are those stages?

Firstly, electronic felling permits. This system  has been successfully implemented since November 2023. As of mid-August 2025, we have issued over 174,000 permits.

Felling e-permit is the general permit document and a starting point for any logging. It is issued and provided to forest users by regional offices of the State Forest Resources Agency.

Electronic felling permit is problem-solving: it eliminates bureaucracy, reduces corruption, strengthens volume control, and prevents abuses related to arbitrarily issued felling permits.

Secondly, electronic waybills (e-waybills). This document is mandatory for every batch of timber being transported. While e-waybills have existed for a while, in 2021, we extended their use to all forest users and improved the technology.

In 2023, we added mandatory photo capture of the logging truck from four angles at the moment of loading. This makes it impossible to load one thing and transport another. The logs’ arrangement is unique, like a fingerprint. Loading the track twice with the same photo submitted would be immediately obvious.

We also plan to add time and geolocation stamps to inform where and when e-document was issued. Verification to be ensured via a satellite connection since a mobile coverage in remote woodlands is not always reliable.

E-waybill data is available online to any Internet user, so either forest guard, law enforcers or environmental activists can check on a logging truck without even having to stop it.

The system monitors how much timber each forest user has harvested and how much they have sold. If a forest user fails to enter information into the Electronic Timber Management System (ETMS), they are breaking the law.

The ETMS was created in the early 2010s, and at the time, it was quite revolutionary. However, the system now needs to be developed further. That's why in 2024, we began developing an improved, second-generation ETMS. It will extend the system's reach to wood processors, ensuring its scalability and speed. This will help guarantee transparency in the timber supply chain and allow for a complete transition to modern IT technologies and tools.

The fourth component is the timber origin certificate. This is the main document required for exporting timber. In December 2023, the State Forest Resources Agency of Ukraine began issuing these certificates electronically. As of mid-August 2025, we have issued almost 109,000 certificates. The digitalization of timber origin certificates automates document verification. After the legality of the timber's origin is confirmed, the exporter receives their certificate.

And, of course, we can't forget about the official online store, "DrovaE." This is the simplest way to buy firewood. The service became particularly relevant during the blackouts. On "DrovaE," customers deal directly with specific forest users. Everything is done in just a few clicks! The only problem is that we can't always guarantee delivery of the order, as a large amount of our equipment has been transferred to the front lines.

What stages of digitalization have not yet been completed?

The implementation of LIDAR technology for remote forest scanning. This is necessary to determine the actual volume of timber in a specific area, which is often higher than what is stated on paper. We even encounter this technology in our daily lives—for example, it's what allows a robot vacuum cleaner to scan objects in a room and map out a cleaning route.

Naturally, this system is more complex and multifunctional in the forestry industry. A scanner is mounted on a flying object and "bombs" the ground with a signal. The signal reflects off objects and returns to the scanner. Based on the distance from which it returns, the system determines the height and density of the obstacles, which are the trees.

The result is not just a 3D map of the forest stand but a complete profile: the number of trees and their species, the height and diameter of their trunks, the timber stock broken down by species, the age of the trees, and a digital landscape of the area. The error in this case is no more than 1.5%, which is very high quality. For comparison, when a forester manually counts trees by sight, the error is 15-20%!

The reason for the delay with the LIDAR system is understandable: the war. "Shaheds" are flying over our forests, not 3D scanners. But we are ready, and as soon as security requirements allow, we will begin industrial scanning of our forests.

Also under development is a platform for GPS tracking of timber trucks. Currently, the technical requirements for the system and the necessary business analytics have been developed. Our goal is to cover 100% of the timber truck fleet.

This isn't just about tracking moving dots on a map! The system will have several levels of validation, with the goal of preventing abuse related to timber transportation. This innovation will allow us to take control of all logistics operations involving timber. We will see the status of each vehicle in real time. First and foremost, we will check the basis for the timber truck's movement: does it even have the right to go into the forest? The system will link a specific vehicle to a specific electronic logging permit number, along with the coordinates of the plot where the timber needs to be loaded and the driver's name. If, for example, the documents state the plot is in the Chernihiv region, but the vehicle is for some reason driving through the Cherkasy region, we will receive a notification in the system.

The system will also control other violations. For instance, if a loaded timber truck begins to move before a waybill for it has been created. What's more, the creation of the waybill can be verified before the truck even starts moving. The laws of physics help here. As a timber truck is loaded, the pressure on the chassis increases. This metric will also be transmitted to the tracking system.

I already mentioned modernizing the electronic timber management system. Currently, the ETMS's function ends when the timber goes to auction. After that, we lose control of the domestic market. Therefore, we need an additional tool: a system for declaring timber sales operations.

This system will be similar to the online banking app that each of us uses on our smartphones. It will have the same principles: an electronic account, a balance, and asset transfers. The only difference is that instead of money, the "assets" will be available timber reserves. This system will allow us to monitor the virtual timber balances of every market participant. Any timber volumes not reflected in the operations declaration system will automatically be considered illegal.

You said, "We are developing the best timber traceability chain in Europe." Are we really better than EU countries?

When we talk to colleagues from Germany or Poland, we realize that our established digital tools are something they don't have. Our traceability chain is very strong—even without all the tools I just mentioned.

It's important to say that this kind of traceability chain is, in a way, a forced measure. It was our response to challenges, primarily corruption. Europeans trust the system's employees so much that they don't even set the goal of increased control.

Specifically, we are already ready for the EUDR – the European Union Deforestation Regulation. We don't need to take any additional steps to catch up to their level, but many EU countries do.

So, does Ukraine have a lower risk of deforestation than EU countries? Not every Ukrainian would believe that...

Exactly! It's hard to find another industry in Ukraine with as many stereotypes. That's why we now want to significantly strengthen our communication efforts and convey the real state of affairs to people.

I'll give just one telling example. The annual increase in timber volume in Ukraine's forests is much greater than the volume harvested. In 2024, the increase was 35 million cubic meters of timber, while harvesting was only 15 million cubic meters!

In European countries, the situation is different: they almost completely use the annual growth they get. For example, Germany used 95 million cubic meters out of 98 million in 2024, and Poland used 38 million out of 40 million.

And this is recognized in Europe! The European Commission recently published an updated list of country classifications by risk level according to the EUDR. Ukraine received a low-risk country status for the first time, and this is the best possible rating!

What does this mean for Ukraine?

Being granted low-risk status opens up new opportunities for Ukrainian exporters of timber, furniture, and other products, making it easier to enter the European market. This status attracts the attention of market giants like IKEA and JYSK.

But we're not ahead of Europe in all respects, are we? What areas do we need to "catch up" in?

Forest management methods. This is the area where we are still "playing out" the legacy of the USSR. What's more—even from the Austro-Hungarian Empire! As is the case with the Carpathians.

Are you referring to the infamous topic of the "bald Carpathians"?

Yes. During the Austro-Hungarian period, native forest stands were cut down, and new ones were created in their place with the spruce trees that are so familiar to us. This species grows quickly and yields a lot of timber.

Soviet foresters continued experimenting with the forests. The country was recovering after World War II and needed a lot of timber. That's why plots were planted using plantation methods, where only a single species—that same spruce—grows over huge areas. When a forest is planted this way, it's later cut down in a clear-cut method. They planted a plantation, they cut a plantation, and it's a never-ending cycle. We need to break this cycle with new management methods.

Last year, the Government passed Resolution No. 454, which prohibits clear-cutting for main use in the Carpathian region starting in 2027. This is the management method that non-specialists call "mass logging."

Selective logging, specifically reformation logging, will replace clear-cutting. Thanks to this, we can transform the forest from one state to another.

The method of forming new forests will also change. These will be complex plantations—multi-layered, mixed, and of various ages. In other words, they will be as close to nature as possible. In this way, we will form a biologically more resilient plantation—both to pests and natural disasters.

If we have a single layer of forest, it is more vulnerable to natural disasters. When a windstorm starts, the forest falls in a single layer. If our forest consists of several layers, then only one of them is affected, and the others remain standing. The same applies to pests.

Returning to the comparison with Europe: they are also more progressive in their use of timber harvesting equipment. Instead of manual labor, they use harvesters and forwarders—modern machines. If a person sees them in action for the first time, they would think it's a scene from a science fiction movie.

A harvester not only fells a tree, clears it of branches, and stacks it, but it also calculates the volume of the felled timber and uploads the data to a central database. No person can calculate with such accuracy and speed!

One harvester costs approximately 600,000 euros, but it pays for itself in just four years. The Ukrainian forestry industry needs 150 such machines. Yes, it's not a cheap pleasure, but it's worth it!

By the way, at the end of last year, the State Forest Resources Agency received seven units of timber harvesting equipment from Denmark—six forwarders and one harvester. This equipment will be used primarily for training specialists. We plan to create a training center for operators of multifunctional equipment at the Dniprovsko-Teterivske Forestry and Hunting Enterprise in the near future. We are very grateful to our European partners for this assistance.

Can you tell us more about international cooperation? What are its main directions?

I sometimes joke that Ukrainian forests are much more international than they seem. Every month, representatives of the industry have business trips abroad to our partner countries, or our partners visit us despite the war. It would take hours to list all the directions and projects. I'll give just a few examples.

The State Forest Resources Agency is a member of four working groups responsible for preparing Ukraine's negotiating positions on the relevant chapters of the European Union's negotiation framework. A bilateral meeting was held in Brussels between the delegations of Ukraine and representatives of the European Commission as part of the official screening for Chapter 27, "Environment and Climate Change."

We actively cooperate with international organizations. For example, with the support of the Food and Agriculture Organization of the United Nations (FAO), the "Sustainable Ukrainian Forest Landscapes" project is being prepared with funding of over $7 million. It provides for the creation of a unique genetic molecular laboratory and a soil research laboratory.

And, of course, bilateral cooperation is developing, primarily with European countries. In particular, two key projects are being implemented with Germany with the assistance of the Federal Ministry of Food and Agriculture (BMEL). The first is "Strengthening Forest Management Planning for More Efficient Use of Timber in the Context of the War in Ukraine" with a budget of $400,000. It provides for the purchase of equipment and the creation of a state forest cadastre. The second is "Assisting in the Planning and Implementation of Multifunctional Sustainable Forest Management in Ukraine" worth 1.26 million euros. This project contributes to the improvement of forest policy and the strengthening of institutional capacity in the field of forest management.

Not everything in the forestry industry depends on you. What legislative initiatives do you need to speed up reforms?

I will outline a few key points. We need to make changes to the legislation that will strengthen the responsibility of forest users for systematic violations of the law. Those who do not carry out thinning and do not plant new trees should understand that the status of a permanent forest user is not so permanent. And there will be consequences for violations.

We also developed a draft law on the specifics of our foreign economic activity and export regime. The current legislation allows certain wood products to be exported abroad without certification. This includes oak veneer and lamella. We want to regulate this issue.

The liberalization of forest management. It could involve allowing private businesses to certain types of work—for example, field research.

The corporatization of the state enterprise "Forests of Ukraine." On the instructions of the President and the decision of the National Security and Defense Council, we developed and submitted a law to the former Ministry of Environmental Protection and Natural Resources that provides for corporatization according to a special scenario and the consolidation of state forest users around the state enterprise "Forests of Ukraine." The separation of management and control functions will be even greater than it is now. Finally, the state enterprise "Forests of Ukraine" will be directly subordinated to the Cabinet of Ministers.

But the main legislative problem is EIA—the Environmental Impact Assessment?

Exactly! This is not a problem for the Agency but for all of Ukraine. More precisely, the problem is not in the environmental impact assessment itself—this is a normal European practice—but in its excessive regulation in Ukraine.

An environmental impact assessment is carried out in cases where we want to determine that a particular forest management measure will not have a significant impact on the ecosystem as a whole. In European countries, an EIA in the forest is carried out in three main cases. The first is when it comes to deforestation. That is, there will never be a forest on this plot. For example, a factory will be built there. The second case is when it comes to creating new forests and afforesting large areas, for example, 20 hectares or more. And the third case is when it comes to transferring land from the forest fund, for example, to the agricultural fund. But even in this case, it is about the equivalent replacement of one land with another. And if land is taken for the agricultural fund in Europe, the same area must be transferred from the agricultural fund to the forest fund.

As for Ukraine, an EIA must be carried out when preparing forest management materials and before a clear sanitary felling of 1 hectare. The last case is the problem.

Clear sanitary felling is carried out when it is necessary to clear blockages after a storm, or to remove burnt trees after a forest fire, or to urgently destroy a pest outbreak. This is not just about the aesthetic appearance of the forest. It's about the ecological safety of the ecosystem. Only after this will foresters be able to plant new trees on the affected area.

And if clear-cuttings for main use are planned, and foresters can order an assessment in advance, a natural disaster cannot be planned. It turns out that while the EIA procedure is ongoing, the broken or burnt forest cannot be touched. The EIA procedure costs an average of half a million hrn and takes from three to six months, and sometimes even more. During this time, the timber rots or dries out and poses a risk to the ecosystem. And while we are conducting an environmental impact assessment, the affected forest is already causing a negative impact.

In addition, over time, the fallen forest loses its commercial value. And since clear sanitary felling makes up almost 20% of the total volume of timber harvesting, the losses on a national scale are significant.

I will give a specific example. Currently, the ash borer is spreading in Ukrainian forests. We cannot work in the epicenter of its occurrence—this is the temporarily occupied Luhansk region. But we could create a quarantine zone on certain plots of the forest. In other words, we could controllably destroy the trees along with the pests. And in this way, we could save other forests.

But we can't! We have to wait for the EIA. And the pest doesn't wait: these green insects have already been spotted in the green spaces of Kyiv!

Are there issues that you solve at the level of local, not central, authorities?

First and foremost, these are issues with forests that have not been assigned to any forest user. These forests are absolutely full-fledged ecosystems that are not currently being managed because they are not distributed. We are talking about 7% of the state forest fund of Ukraine, 800,000 hectares. This is three times the area of Luxembourg, or half of Montenegro!

The transfer of such lands to permanent forest use is impossible without cooperation with local authorities. If the forest is located on state land, the decision must be made by the regional state administration. If it is on communal land, the territorial community.

Local authorities can transfer forests to the units of the state enterprise "Forests of Ukraine." Or they can create their own communal enterprise that will be a forest user; the law allows this. The main thing is not to leave the forest without an owner.

When huge areas of forest resources are temporarily occupied or mined, every hectare is valuable. To properly provide the Armed Forces and wood processing enterprises with timber, we must use all available resources as efficiently as possible. Therefore, the State Forest Resources Agency of Ukraine is actively working with local authorities to resolve the issue.

Over the past few years, we have implemented a number of institutional changes in the industry. This has increased the transparency and traceability of timber. It has brought us closer to EU standards and positively affected all financial and economic indicators of the industry. Our reforms today are gaining recognition from leading Western countries and will become a model for others to follow tomorrow. The new status of a low-risk exporting country is the best proof of this. Our forests are the lungs of Europe. And they will breathe to their full capacity.