One-third of Switzerland is covered by forest, however, only half of the timber produced is utilised, according to the Swiss environment agency.
The agency says in order to increase the use of Swiss timber the industry has to become more competitive.
On Saturday, the International Day of the Forest, the director of the Swiss environment agency, Philippe Roch, blamed the economic situation for the decline.
“It is no longer possible to manage forests in a profit-making way,” Roch said.
Every year more than 10 million cubic metres of wood grow in Switzerland and, the agency says, the country has the biggest wood reserves in Europe.
Environmental organisations claim that increased utilisation of Swiss wood would make sense environmentally as well as economically.
“I think one of the main problems is that wood is not as efficient as other raw material, which is being sold at cheaper prices,” Roch said.
“However, using wood as a renewable energy source or ecological building material is the answer to the climate change,” he added.
Another reason for the decline, according to parliamentarian Stefan Engler, is the fact that Switzerland imports wood from other countries.
“Due to the fact that our wood is not really used we have one of the highest wood reserves in Europe,” Engler said.
“The Swiss wood industry is not very competitive and demand is slack.”
According to the environment agency about 64 per cent of Switzerland’s forest enterprises made a loss last year despite being subsidised by the government and cantons.
The Swiss Forest Agency is currently reviewing Switzerland’s forestry policies. It has to decide what state the country’s forests should be in by 2015.
The country’s forestry law was last changed in 1991, but a number of issues have arisen since then that the agency thinks may need to be incorporated into legislation.
swissinfo with agencies