The EU is the major trade partner of Latvia. Out of the total volume of export 88.9 % goes to the EU member states. In 2004, in terms of actual prices, the export volume of Latvian commodities increased by 30 %, the export to the EU member states - by 24 %. In 2004, the volume of export increased in all the commodity groups, with the wood products export accounting for 11% of the increase in export value.
Chart 1. Latvian Forest industry export, milj. LVL, years 1995-2005.

The year 2004, noted of an increase in net turnover by several million LVL, was successful for most of the enterprises. The investments in wood processing equipment for turning out higher added value products, higher volumes of production and sales, as well as more favorable situation for wood products on the export markets, avoiding agent services, and as much as possible dealing with the end users or chains of market outlets, are some of the factors favoring the growth.
Chart 2. Structure of Latvian Forest industry export, split by product groups, year 2004, milj. LVL.
 
In Latvia, the small and medium size enterprises predominate in the wood-processing sector. The total number of enterprises is 1,200, of which about 100 has a turnover from 5 to 81 million LVL. In the past two years, an intensive regrouping of enterprises is observed. The big manufacturers re-orient mostly to the market segments where the volume of consumption is high, still within limits possible adding value to the products offered: construction timber, impregnated timber products, building materials and components.
The medium and small enterprises in their turn focus on niche products: items for gardening, decking, boarding, wooden packaging, carpentry and joinery products etc. Considering that over the recent years globalization has substantially affected manufacturing for the international wood products market, the wood product consumption, too, is becoming increasingly dependent on global supplies. In the sector of secondary processing of wood the role of warehousing is reducing, and the manufacturing depends on exact and just-in-time deliveries. Just these developments, coupled with the advantages of the country’s geographical situation, have enabled the Latvian forest sector businesses to take up a position of a stable, long-term, and reliable partner for direct supplies to the EU manufacturers, including the DIY (Do It Yourself) chains of market outlets and construction companies.