Present State and Future Prospects of Fur Farming in Finland

Summary

The aim of the report is to explore the structural change taking place in the Finnish fur farming sector, paying particular attention to future options. The first part of the report, which focuses on the present state, looks at the economic significance of fur farming in Finland. Important considerations in this respect are the sector’s export revenues, its effects on employment, and the taxes paid by the business to the state and municipalities. The second part of the report scrutinizes domestic and international examples of follow-up procedures associated with structural changes and the means by which the government and other public actors could further the creation of new jobs in the fur farming regions as well as support the re-employment of the sector’s entrepreneurs and employees.

The present state analysis indicates that two thirds of the gross export revenue of the sector is from pelts that have been imported to Finland from elsewhere, most often from Poland. In other words, one third of the gross export revenue remains in Finland, whereas two thirds go to foreign pelt producers. In total, the net export revenue from pelt sales constitutes 0.2 per cent of Finland’s total revenue from the export of goods.

As concerns employment effects, the fur farming business, which is geographically concentrated in four Ostrobothnian regions, is mostly a small-scale and part-time activity. There are about 600 fur farm enterprises (limited companies, limited partnerships, partnerships and sole proprietors). Calculations based on the material acquired from Statistics Finland indicate that the direct employment effect of fur farming is about 900 person-years and the total employment effect (incl. multiplier effect) is approximately 1,800 person-years. In practice, a just transition in the fur farming sector would imply that 200-300 fur farmers would need to be compensated for the loss of livelihood and their employees supported in their search for other work. Part-time fur farmers would possibly also need support based on the extent of their engagement in the business. All entrepreneurs would need to be compensated for those investments that they will not have time to write off during the transition period.

As concerns taxation, the corporation taxes paid by fur farming companies make up 0,02 per cent of the Finnish government’s entire corporation tax revenue. On the local government level, the share of corporation taxes paid by fur farms varies from zero to 3.4 per cent of an individual municipality’s entire corporation tax revenue.

A review of domestic and international examples yielded a wealth of examples on how the structural change of the fur farming sector could be supported. If the Finnish government decided to terminate the trade, the biggest challenge would not be the lack of funding but finding new jobs for the individuals currently employed in fur farming. Despite the Ostrobothnian regions’ self-sufficiency in workplaces and their low unemployment figures, the area requires development measures as its economic structure is still primary-production intensive. One option is to trust the innovation capabilities of entrepreneurial individuals and provide them with business development services and associated financial aid. Novel business opportunities might be offered by the cultivation of peas, fava beans and lupin and their commercial development into novel plant-based protein sources. Another option is to expand greenhouse cultivation, which is already a prominent business in the area, and a third opportunity is provided by renewable energy production and circular economy business. There are already several ongoing wind energy projects as well as bio- and circular economy projects in the Ostrobothnian regions. The area is also home to some factories, which could offer jobs to fur farm employees. Some fur farmer can also be expected to retire during the transition period.

Based on the assumption that the Finnish government decides to take on its agenda the controlled termination of the fur farming trade, the report offers the following recommendations:

• A multi-sectoral working group will be established with members from ministries, universities and research institutes as well as from organizations representing not only the fur farmers’ but also the animals’ viewpoint. The group will commission detailed assessments of the fur farmers’ age structure, degree of full-time / part-time occupation, the profitability of the business as well as the present value of the fixed assets. This will enable a more specific assessment of the transition period, the necessity of support measures and the amounts of financial support potentially needed. 

• The recommended length of the transition period is five to seven years as this is viewed as a compromise between the government and the fur farmers. If the transition period is shorter, the compensation paid from public sources is larger. In contrast, if the transition period is longer, the entrepreneurs and employees of the sector will not necessarily receive any financial support.

• The structural change of the fur farming sector will be included as an agenda item in the regional development discussions held between the government and the Ostrobothnian regions. The government will undertake to make an additional investment into the region’s vitality and the development of its economic structure.

• The government will grant the regional Centres for Economic Development, Transport and the Environment additional funding for services and support directed at developing new business to replace fur farming.

• The government will grant municipalities additional funding for services and support directed at the retraining and re-employment of fur farmers and employees.

• The government will undertake to compensate 40-50 per cent of the demolition and/or conversion costs of fur farming structures, with a maximum sum per farm.

Eija Vinnari, Tampere University